\n 5.3 Reasonable Best Efforts……………………………………………40
\n ———————–
\n 5.4 Non-Solicitation………………………………………………….41
\n —————-
\n 5.5 Fees and Expenses…………………………………………………44
\n —————–
\n 5.6 Directors’ and Officers’ Indemnification and Insurance………………..44
\n ——————————————————
\n 5.7 Board of Directors and Officers…………………………………….45
\n ——————————-
\n 5.8 Public Announcements………………………………………………45
\n ——————–
\n 5.9 Accountant’s Letters………………………………………………45
\n ——————–
\n 5.10 Listing of Shares of Western Common Stock……………………………45
\n —————————————–
\n 5.11 Affiliates……………………………………………………….46
\n ———-
\n 5.12 Benefits Maintenance………………………………………………46
\n ——————–
\n 5.13 Agreement to Consult on Certain Matters……………………………..46
\n —————————————
\n 5.14 Adaptive Rights Agreement………………………………………….46
\n ————————-<\/p>\nARTICLE VI CONDITIONS PRECEDENT…………………………………………………….47<\/p>\n
6.1 Conditions to Each Party’s Obligation to Effect Merger………………..47
\n ——————————————————
\n 6.2 Additional Conditions to Obligations of Western………………………47
\n ———————————————–
\n 6.3 Additional Conditions to Obligations of Adaptive……………………..48
\n ————————————————<\/p>\n
ARTICLE VII TERMINATION AND AMENDMENT……………………………………………….49<\/p>\n
7.1 Termination………………………………………………………49
\n ———–
\n 7.2 Effect of Termination……………………………………………..50
\n ———————
\n 7.3 Amendment………………………………………………………..52
\n ———
\n 7.4 Extension; Waiver…………………………………………………53
\n —————–<\/p>\n
ARTICLE VIII GENERAL PROVISIONS…………………………………………………….53<\/p>\n
8.1 Non-Survival of Representations, Warranties and Agreements…………….53
\n ———————————————————-
\n 8.2 Notices………………………………………………………….53
\n ——-
\n 8.3 Interpretation……………………………………………………54
\n ————–
\n 8.4 Counterparts……………………………………………………..54
\n ————
\n 8.6 Governing Law…………………………………………………….55
\n ————-
\n 8.7 Severability……………………………………………………..55
\n ————
\n 8.8 Assignment……………………………………………………….55
\n ———-
\n 8.9 Submission to Jurisdiction; Waivers…………………………………55
\n ———————————–
\n 8.10 Enforcement………………………………………………………56
\n ———–
\n 8.11 Definitions………………………………………………………56
\n ———–
\n<\/c><\/c><\/s><\/table>\n
ii<\/p>\n
LIST OF EXHIBITS<\/p>\n
Exhibit Title
\n——- —–<\/p>\n
Exhibit A Adaptive Stock Option Agreement
\nExhibit B Western Stock Option Agreement
\nExhibit C Form of Voting Agreement of WMC Holding
\nExhibit 6.2(c)(1) Form of Representations Letter of Western
\nExhibit 6.2(c)(2) Form of Representations Letter of Adaptive<\/p>\n
AGREEMENT AND PLAN OF MERGER, dated as of November 12, 2000 (this
\n“Agreement”), among Adaptive Broadband Corporation, a Delaware corporation
\n ———
\n(“Adaptive”), Western Multiplex Corporation, a Delaware corporation (“Western”),
\n ——– ——-
\nand WA Merger Sub, Inc., a Delaware corporation (“Merger Sub”).
\n ———-
\n RECITALS
\n ——–<\/p>\n
Merger Sub is a wholly owned direct subsidiary of Western that was
\norganized by Western solely as a vehicle to effect the Merger (as defined below)
\nand has engaged in no other business activities and has conducted its business
\nactivities and operations only as contemplated hereby;<\/p>\n
The Boards of Directors of Adaptive, Western and Merger Sub deem it
\nadvisable and in the best interests of each corporation and its respective
\nstockholders that Merger Sub merge into Adaptive, upon the terms and subject to
\nthe conditions of this Agreement;<\/p>\n
Approval of the Merger and this Agreement requires a vote for (x) adoption
\nof this Agreement by the holders of shares of Common Stock, par value $.10 per
\nshare, of Adaptive (the “Adaptive Common Stock”) at a meeting at which a quorum
\n ———————
\nis present, in the manner specified in the certificate of incorporation of
\nAdaptive and otherwise in accordance with the law of the State of Delaware (the
\n“Adaptive Stockholder Approval”), and (y) the approval of the issuance of Class
\n —————————–
\nA Common Stock, par value $0.01 per share, of Western (the “Western Common
\n ————–
\nStock”) pursuant to this Agreement, by the holders of a majority of the shares
\n—–
\nof Western Common Stock entitled to vote thereon represented, in person or by
\nproxy, at a meeting at which a quorum is present, in accordance with the rules
\nof the NASDAQ Stock Market (the “Western Stockholder Approval”);
\n —————————-<\/p>\n
In furtherance thereof, the Board of Directors of each of Adaptive, Western
\nand Merger Sub have approved the Merger, upon the terms and subject to the
\nconditions set forth in this Agreement, pursuant to which each share of Adaptive
\nCommon Stock will be converted into the right to receive the Merger
\nConsideration (as defined below);<\/p>\n
As a condition and inducement to Western’s willingness to enter into this
\nAgreement and the Western Stock Option Agreement referred to below, Western and
\nAdaptive are entering into a Stock Option Agreement dated as of the date hereof
\nin the form of Exhibit A (the “Adaptive Stock Option Agreement”) pursuant to
\n ——————————-
\nwhich Adaptive is granting to Western an option to purchase shares of Adaptive
\nCommon Stock;<\/p>\n
As a condition and inducement to Adaptive’s willingness to enter into this
\nAgreement and the Adaptive Stock Option Agreement, Western and Adaptive are
\nentering into a Stock Option Agreement dated as of the date hereof in the form
\nof Exhibit B (the “Western Stock Option Agreement” and, together with the
\n ——————————
\nAdaptive Stock Option Agreement, the “Stock Option Agreements”), pursuant to
\n ———————–
\nwhich Western is granting to Adaptive an option to purchase shares of Western
\nCommon Stock;<\/p>\n
As a condition and inducement to Adaptive’s willingness to enter into this
\nAgreement, WMC Holding LLC (“WMC Holding”), the owner of a majority of the
\n ———–
\nWestern Common Stock as of the date of this Agreement, is entering into an
\nagreement dated as of the <\/p>\n
date hereof substantially in the form of Exhibit C (the “WMC Holding Voting
\n ——————
\nAgreement”) pursuant to which WMC Holding has agreed, among other things, to
\n———
\nvote all shares of Western Common Stock owned or acquired by it in favor of the
\nadoption of this Agreement and the transactions contemplated hereby;<\/p>\n
Certain key employees of Adaptive and Western have entered into agreements
\nwith respect to their employment in connection with this Agreement, effective as
\nof the Effective Time; and<\/p>\n
For federal income tax purposes, it is intended that the Merger shall
\nqualify as a reorganization under the provisions of Section 368(a) of the
\nInternal Revenue Code of 1986, as amended (the “Code”) and this Agreement will
\n —-
\nconstitute a “plan of reorganization” for purposes of Section 368 of the Code.<\/p>\n
AGREEMENT
\n ———<\/p>\n
NOW, THEREFORE, in consideration of the foregoing and the respective
\nrepresentations, warranties, covenants and agreements set forth in this
\nAgreement, and intending to be legally bound hereby and thereby, the parties
\nhereto agree as follows:<\/p>\n
ARTICLE I
\n THE MERGER; CERTAIN RELATED MATTERS<\/p>\n
1.1 The Merger.
\n ———-<\/p>\n
Upon the terms and subject to the conditions set forth in this
\nAgreement, and in accordance with the Delaware General Corporation Law (the
\n“DGCL”), at the Effective Time:
\n —-
\n (a) The Surviving Corporation. Upon the terms and subject to the
\n ————————-
\nconditions of this Agreement, Merger Sub shall merge with and into Adaptive (the
\n“Merger”), the separate existence of Merger Sub shall cease and Adaptive
\n ——
\n(sometimes hereinafter referred to as the “Surviving Corporation”) shall survive
\n ———————
\nthe Merger. The name of the Surviving Corporation shall be “Adaptive Broadband
\nCorporation”. The Surviving Corporation shall continue to be governed by the
\nlaws of the State of Delaware, and the separate corporate existence of the
\nSurviving Corporation with all its rights, privileges, immunities, powers and
\nfranchises shall continue unaffected by the Merger.<\/p>\n
1.2 Closing.
\n ——-<\/p>\n
Upon the terms and subject to the conditions set forth in Article VI
\nand the termination rights set forth in Article VII, the closing of the Merger
\n(the “Closing”) will take place on the third Business Day after the satisfaction
\n ——-
\nor waiver (subject to applicable law) of the conditions (excluding conditions
\nthat, by their nature, cannot be satisfied until the Closing Date (as defined
\nbelow)) set forth in Article VI, unless this Agreement has been theretofore
\nterminated pursuant to its terms or unless another time or date is agreed to in
\nwriting by the parties hereto (the actual time and date of the Closing being
\nreferred to herein as the “Closing Date”). The
\n ————<\/p>\n
2<\/p>\n
Closing shall be held at the offices of Simpson Thacher & Bartlett, 3330
\nHillview Avenue, Palo Alto, CA 94304, unless another place is agreed to in
\nwriting by the parties hereto.<\/p>\n
1.3 Effective Time.
\n ————–<\/p>\n
As soon as practicable following the satisfaction or waiver (subject to
\napplicable law) of the conditions set forth in Article VI, at the Closing the
\nparties shall file a certificate of merger (the “Certificate of Merger”) with
\n ———————
\nthe Secretary of State of the State of Delaware in such form as is required by
\nand executed and acknowledged in accordance with the relevant provisions of the
\nDGCL and make all other filings or recordings required under the DGCL. The
\nMerger shall become effective at (i) the date and time the Certificate of Merger
\nis duly filed with the Secretary of State of the State of Delaware or (ii) such
\nsubsequent time as Western, Merger Sub and Adaptive shall agree and as shall be
\nspecified in the Certificate of Merger (such time as the Merger becomes
\neffective being the “Effective Time”).
\n ————–
\n 1.4 Effects of the Merger.
\n ———————<\/p>\n
At and after the Effective Time, the Merger will have the effects set
\nforth in the applicable provisions of the DGCL.<\/p>\n
1.5 Charter and Bylaws.
\n ——————<\/p>\n
(a) Certificate of Incorporation. At the Effective Time, and without
\n —————————-
\nany further action on the part of Western or Merger Sub, the certificate of
\nincorporation of Adaptive, as amended and restated prior to the Effective Time,
\nshall be the certificate of incorporation of the Surviving Corporation until
\nthereafter changed or amended as provided therein or by applicable law.<\/p>\n
(b) Bylaws. At the Effective Time, and without any further action on
\n ——
\nthe part of Western or Merger Sub, the bylaws of Merger Sub as in effect at the
\nEffective Time shall be the bylaws of the Surviving Corporation until thereafter
\nchanged or amended as provided therein or by applicable law.<\/p>\n
1.6 Officers and Directors.
\n ———————-<\/p>\n
The officers of Merger Sub immediately prior to the Effective Time
\nshall be the officers of the Surviving Corporation, until the earlier of their
\ndeath, resignation or removal or until their respective successors are duly
\nelected and qualified, as the case may be, except that Daniel Scharre and Donna
\nBirks shall be President and Chief Operating Officer and Chief Financial
\nOfficer, respectively, of Western. The directors of Merger Sub immediately prior
\nto the Effective Time shall be the directors of the Surviving Corporation, until
\nthe earlier of their death, resignation or removal or until their respective
\nsuccessors are duly elected and qualified, as the case may be.<\/p>\n
3<\/p>\n
1.7 Effect on Common Stock.
\n ———————-<\/p>\n
As of the Effective Time, by virtue of the Merger and without any
\naction on the part of the holder of any shares of Adaptive Common Stock or of
\nany shares of Merger Sub Common Stock (as defined below):<\/p>\n
(a) Common Stock of Merger Sub. Each issued and outstanding share of
\n ————————–
\ncommon stock, par value $0.01 per share, of Merger Sub (the “Merger Sub Common
\n —————–
\nStock”) shall, by virtue of the Merger, be converted into one share of common
\n—–
\nstock, par value $0.10 per share, of the Surviving Corporation.<\/p>\n
(b) Cancellation of Merger Sub-Owned Adaptive Common Stock. Each share
\n ——————————————————
\nof Adaptive Common Stock that is owned by Western or Merger Sub shall
\nautomatically be canceled and retired and shall cease to exist, and no cash,
\nWestern Common Stock or other consideration shall be delivered or deliverable in
\nexchange therefore.<\/p>\n
(c) Conversion of Adaptive Common Stock. Subject to Section 2.5, each
\n ———————————–
\nissued and outstanding share of Adaptive Common Stock (other than shares
\ncanceled pursuant to Section 1.7(b)), shall be converted into the right to
\nreceive a number of shares of Western Common Stock equal to the Exchange Ratio.
\nThe “Exchange Ratio” means 1.345. The amount of Western Common Stock into which
\n ————–
\neach such share of Adaptive Common Stock (plus cash in lieu of a fractional
\nshare) is converted is referred to herein as the “Merger Consideration”.
\n ——————–<\/p>\n
(d) Cancellation and Retirement of Adaptive Common Stock. As a result
\n —————————————————-
\nof the Merger and without any action on the part of the holders thereof, at the
\nEffective Time, all shares of Adaptive Common Stock shall cease to be
\noutstanding and shall be canceled and retired and shall cease to exist, and each
\nholder of a certificate which immediately prior to the Effective Time
\nrepresented any such shares of Adaptive Common Stock (such certificate or other
\nevidence of ownership, a “Certificate”) shall thereafter cease to have any
\n ———–
\nrights with respect to such shares of Adaptive Common Stock, except the right
\n(subject to Section 1.7(c)) to receive the applicable Merger Consideration (and
\ncash in lieu of fractional shares of Western Common Stock) to be issued or paid
\nin consideration therefor upon surrender of such Certificate in accordance with
\nArticle II.<\/p>\n
1.8 Treatment of Stock Options and Other Equity-Based Awards.
\n ——————————————————–<\/p>\n
Each outstanding option to purchase Adaptive Common Stock (a “Adaptive Common
\n —————
\nStock Option”) granted prior to the Effective Time and which remains outstanding
\n————
\nimmediately prior to the Effective Time shall cease to represent a right to
\nacquire shares of Adaptive Common Stock and shall be converted (each, as so
\nconverted, a “Adaptive Converted Option”), at the Effective Time, into an option
\n ————————-
\nto acquire, on the same terms and conditions as were applicable under the
\nAdaptive Common Stock Option, that number of shares of Western Common Stock
\ndetermined by multiplying the number of shares of Adaptive Common Stock subject
\nto such Adaptive Common Stock Option by the Adaptive Exchange Ratio, rounded
\ndown, if necessary, to the nearest whole share of Western Common Stock, at a
\nprice per share (rounded up to the nearest one-hundredth of a cent) equal to the
\nper share exercise price specified in such Adaptive Common Stock Option divided
\nby the Exchange Ratio; provided, however, that in the case of
\n ——– ——-<\/p>\n
4<\/p>\n
any Adaptive Common Stock Option to which Section 421 of the Code applies by
\nreason of its qualification under Section 422 of the Code, the option price, the
\nnumber of shares subject to such option and the terms and conditions of exercise
\nof such option shall be determined in a manner consistent with the requirements
\nof Section 424(a) of the Code. The terms, exercisability, vesting schedule and
\nother provisions of such Adaptive Common Stock Options shall otherwise remain
\nunchanged. Western shall file with the Securities and Exchange Commission,
\nwithin fifteen (15) days after the Effective Time, a Registration Statement on
\nForm S-8 relating to the shares of Western Common Stock issuable with respect to
\nthe Adaptive Common Stock Options assumed by Western in accordance with this
\nSection 1.8. In addition to the foregoing, Adaptive shall take all actions
\nnecessary to provide that, with respect to its Supplemental Executive Deferred
\nCompensation Plan and its Phantom Stock Plan thereunder, all common and phantom
\nstock accounts shall be converted into common and phantom stock accounts, as
\napplicable, relating to shares of Western Common Stock and all such stock
\naccounts, when and to the extent payable in stock, shall be paid in shares of
\nWestern Common Stock.<\/p>\n
1.9 Certain Adjustments.
\n ——————-<\/p>\n
If, between the date of this Agreement and the Effective Time (and as
\npermitted by Sections 4.1 and 4.2), the outstanding shares of Western Common
\nStock or the outstanding shares of Adaptive Common Stock shall have been
\nincreased, decreased, changed into or exchanged for a different number of shares
\nor different class, in each case, by reason of any reclassification,
\nrecapitalization, stock split, reverse stock split, split-up, combination or
\nexchange of shares or a stock dividend or dividend payable in any other
\nsecurities shall be declared with a record date within such period, or any
\nsimilar event shall have occurred, the Merger Consideration (as defined in
\nSection 1.7(c)) shall be appropriately adjusted to provide to the holders of
\nAdaptive Common Stock, Adaptive Common Stock Options and Western Common Stock
\nthe same economic effect as contemplated by this Agreement prior to such event.<\/p>\n
ARTICLE II
\n EXCHANGE OF CERTIFICATES<\/p>\n
2.1 Exchange Fund.
\n ————-<\/p>\n
Prior to the Effective Time, Western shall appoint a commercial bank or
\ntrust company reasonably acceptable to Adaptive, or a subsidiary thereof, to act
\nas exchange agent hereunder for the purpose of exchanging Certificates for the
\napplicable Merger Consideration (the “Exchange Agent”). At or prior to the
\n ————–
\nEffective Time, Western shall deposit with the Exchange Agent, in trust for the
\nbenefit of holders of shares of Adaptive Common Stock, certificates representing
\nthe shares of Western Common Stock issuable pursuant to Section 1.7 in exchange
\nfor Certificates. Western agrees to make available to the Exchange Agent from
\ntime to time, as needed, cash sufficient to pay cash in lieu of fractional
\nshares pursuant to Section 2.5 and any dividends and other distributions
\npursuant to Section 2.3. Any cash and certificates representing Western Common
\nStock deposited with the Exchange Agent shall hereinafter be referred to as the
\n“Exchange Fund”.
\n ————-<\/p>\n
5<\/p>\n
2.2 Exchange Procedures.
\n ——————-<\/p>\n
Promptly after the Effective Time, Western shall cause the Exchange
\nAgent to mail to each holder of a Certificate (i) a letter of transmittal which
\nshall specify that delivery shall be effected, and risk of loss and title to the
\nCertificates shall pass, only upon proper delivery of the Certificates to the
\nExchange Agent, and which letter shall be in customary form and have such other
\nprovisions as Adaptive may reasonably specify (such letter to be reasonably
\nacceptable to Adaptive prior to the Effective Time) and (ii) instructions for
\neffecting the surrender of such Certificates in exchange for the applicable
\nMerger Consideration, together with any dividends and other distributions with
\nrespect thereto and any cash in lieu of fractional shares. Upon surrender of a
\nCertificate to the Exchange Agent together with such letter of transmittal, duly
\nexecuted and completed in accordance with the instructions thereto, and such
\nother documents as may reasonably be required by the Exchange Agent, the holder
\nof such Certificate shall be entitled to receive in exchange therefore (A) one
\nor more shares of Western Common Stock representing, in the aggregate, the whole
\nnumber of shares that such holder has the right to receive pursuant to Section
\n1.7 (after taking into account all shares of Adaptive Common Stock then held by
\nsuch holder) and (B) a check in the amount equal to the cash that such holder
\nhas the right to receive pursuant to the provisions of this Article II,
\nincluding cash in lieu of any fractional shares of Western Common Stock pursuant
\nto Section 2.5 and dividends and other distributions pursuant to Section 2.3. No
\ninterest will be paid or will accrue on any cash payable pursuant to Section 2.3
\nor Section 2.5. In the event of a transfer of ownership of Adaptive Common Stock
\nthat is not registered in the transfer records of Adaptive a certificate
\nevidencing, in the aggregate, the proper number of shares of Western Common
\nStock, a check in the proper amount of cash in lieu of any fractional shares of
\nWestern Common Stock pursuant to Section 2.5 and any dividends or other
\ndistributions to which such holder is entitled pursuant to Section 2.3, may be
\nissued with respect to such Adaptive Common Stock to such a transferee if the
\nCertificate representing such shares of Adaptive Common Stock is presented to
\nthe Exchange Agent, accompanied by all documents reasonably required to evidence
\nand effect such transfer and to evidence that any applicable stock transfer
\ntaxes have been paid.<\/p>\n
2.3 Distributions with Respect to Unexchanged Shares.
\n ————————————————<\/p>\n
No dividends or other distributions with a record date after the
\nEffective Time shall be paid to the holder of any unsurrendered Certificate with
\nrespect to the shares of Western Common Stock that such holder would be entitled
\nto receive upon surrender of such Certificate and no cash payment in lieu of
\nfractional shares of Western Common Stock shall be paid to any such holder
\npursuant to Section 2.5 until such holder shall surrender such Certificate in
\naccordance with Section 2.2. Subject to the effect of applicable laws, following
\nsurrender of any such Certificate, there shall be paid to the record holder
\nthereof without interest, (a) promptly after the time of such surrender, the
\namount of any cash payable in lieu of fractional shares of Western Common Stock
\nto which such holder is entitled pursuant to Section 2.5 and the amount of
\ndividends or other distributions with a record date after the Effective Time
\ntheretofore paid with respect to such whole shares of Western Common Stock, and
\n(b) at the appropriate payment date, the amount of dividends or other
\ndistributions with a record date after the Effective Time and a payment date
\nsubsequent to such surrender payable with respect to such shares of Western
\nCommon Stock.<\/p>\n
6<\/p>\n
2.4 No Further Ownership Rights in Adaptive Common Stock.
\n —————————————————-<\/p>\n
All shares of Western Common Stock issued and cash paid upon conversion
\nof shares of Adaptive Common Stock in accordance with the terms of Article I and
\nthis Article II (including any cash paid pursuant to Sections 2.3 or 2.5) shall
\nbe deemed to have been issued or paid in full satisfaction of all rights
\npertaining to the shares of Adaptive Common Stock.<\/p>\n
2.5 No Fractional Shares of Western Common Stock.
\n ——————————————–<\/p>\n
(a) No certificates or scrip or shares of Western Common Stock
\nrepresenting fractional shares of Western Common Stock or book-entry credit of
\nthe same shall be issued upon the surrender for exchange of Certificates and
\nsuch fractional share interests will not entitle the owner thereof to vote or to
\nhave any rights of a stockholder of Western or a holder of shares of Western
\nCommon Stock.<\/p>\n
(b) Notwithstanding any other provision of this Agreement, each holder
\nof shares of Adaptive Common Stock converted pursuant to the Merger who would
\notherwise have been entitled to receive a fraction of a share of Western Common
\nStock (determined after aggregating all fractional shares of Western Common
\nStock to such holder) shall receive, in lieu thereof, cash (without interest) in
\nan amount equal to the product of (i) such fractional part of a share of Western
\nCommon Stock multiplied by (ii) the closing price for a share of Western Common
\nStock as reported on the National Association of Securities Dealers Automated
\nQuotation System (“NASDAQ”) on the first trading day following the date on which
\n ——
\nthe Effective Time occurs. As promptly as practicable after the determination of
\nthe amount of cash, if any, to be paid to holders of fractional interests, the
\nExchange Agent shall so notify Western, and Western shall deposit such amount
\nwith the Exchange Agent and shall cause the Exchange Agent to forward payments
\nto such holders of fractional interests subject to and in accordance with the
\nterms hereof.<\/p>\n
2.6 Termination of Exchange Fund.
\n —————————-<\/p>\n
Any portion of the Exchange Fund which remains undistributed to the
\nholders of Certificates for six months after the Effective Time shall, at
\nWestern’s request, be delivered to Western or otherwise on the instruction of
\nWestern, and any holders of the Certificates who have not theretofore complied
\nwith this Article II shall after such delivery look only to Western for the
\nMerger Consideration with respect to the shares of Adaptive Common Stock
\nformerly represented thereby to which such holders are entitled pursuant to
\nSections 1.7 and 2.2, any cash in lieu of fractional shares of Western Common
\nStock to which such holders are entitled pursuant to Section 2.5 and any
\ndividends or distributions with respect to shares of Western Common Stock to
\nwhich such holders are entitled pursuant to Section 2.3. Any such portion of the
\nExchange Fund remaining unclaimed by holders of shares of Adaptive Common Stock
\nimmediately prior to such time as such amounts would otherwise escheat to or
\nbecome property of any Governmental Entity (as defined in Section 3.1(c)(iii))
\nshall, to the extent permitted by law, become the property of Western free and
\nclear of any claims or interest of any Person previously entitled thereto.<\/p>\n
2.7 No Liability.
\n ————<\/p>\n
7<\/p>\n
To the fullest extent permitted by law, none of Western, Merger Sub,
\nAdaptive, Western Majority Shareholder or the Exchange Agent shall be liable to
\nany Person in respect of any Merger Consideration from the Exchange Fund
\ndelivered to a public official pursuant to any applicable abandoned property,
\nescheat or similar law.<\/p>\n
2.8 Investment of the Exchange Fund.
\n ——————————-<\/p>\n
The Exchange Agent shall invest any cash included in the Exchange Fund
\nas directed by Western on a daily basis; provided that no such investment or
\n ——–
\nloss thereon shall affect the amounts payable to Adaptive stockholders pursuant
\nto Article I and the other provisions of this Article II. Any interest and other
\nincome resulting from such investments shall promptly be paid to Western.<\/p>\n
2.9 Lost Certificates.
\n —————–<\/p>\n
If any Certificate shall have been lost, stolen or destroyed, upon the
\nmaking of an affidavit of that fact by the Person claiming such Certificate to
\nbe lost, stolen or destroyed and, if reasonably required by Western, the posting
\nby such Person of a bond in such reasonable amount as Western may direct as
\nindemnity against any claim that may be made against it with respect to such
\nCertificate, the Exchange Agent will deliver in exchange for such lost, stolen
\nor destroyed Certificate the applicable Merger Consideration with respect to the
\nshares of Adaptive Common Stock formerly represented thereby, any cash in lieu
\nof fractional shares of Western Common Stock, and unpaid dividends and
\ndistributions on shares of Western Common Stock deliverable in respect thereof,
\npursuant to this Agreement.<\/p>\n
2.10 Withholding Rights.
\n ——————<\/p>\n
Western shall be entitled to deduct and withhold from the
\nconsideration otherwise payable pursuant to this Agreement to any holder of
\nshares of Adaptive Common Stock such amounts as it is required to deduct and
\nwithhold with respect to the making of such payment under the Code and the rules
\nand regulations promulgated thereunder, or any provision of state, local or
\nforeign tax law. To the extent that amounts are so withheld by Western, such
\nwithheld amounts shall be treated for all purposes of this Agreement as having
\nbeen paid to the holder of the shares of Adaptive Common Stock in respect of
\nwhich such deduction and withholding was made by Western.<\/p>\n
2.11 Further Assurances.
\n ——————<\/p>\n
At and after the Effective Time, the officers and directors of Western
\nwill be authorized to execute and deliver, in the name and on behalf of Merger
\nSub or Adaptive, any deeds, bills of sale, assignments or assurances and to take
\nand do, in the name and on behalf of Merger Sub or Adaptive, any other actions
\nand things to vest, perfect or confirm of record or otherwise in Western any and
\nall right, title and interest in, to and under any of the rights, properties or
\nassets acquired or to be acquired by Western as a result of, or in connection
\nwith, the Merger.<\/p>\n
2.12 Stock Transfer Books.
\n ——————–<\/p>\n
8<\/p>\n
The stock transfer books of Adaptive shall be closed immediately upon
\nthe Effective Time and there shall be no further registration of transfers of
\nshares of Adaptive Common Stock thereafter on the records of Adaptive. On or
\nafter the Effective Time, any Certificates presented to the Exchange Agent or
\nWestern for any reason shall be exchanged for the applicable Merger
\nConsideration with respect to the shares of Adaptive Common Stock formerly
\nrepresented thereby (including any cash in lieu of fractional shares of Western
\nCommon Stock to which the holders thereof are entitled pursuant to Section 2.5
\nand any dividends or other distributions to which the holders thereof are
\nentitled pursuant to Section 2.3).<\/p>\n
ARTICLE III
\n REPRESENTATIONS AND WARRANTIES<\/p>\n
3.1 Representations and Warranties of Western and Merger Sub.
\n ——————————————————–<\/p>\n
Except as disclosed in the Western Filed SEC Reports (as defined in
\nSection 3.1(d)(ii)) or as set forth in the Western Disclosure Schedule delivered
\nby Western to Adaptive prior to the execution of this Agreement (the “Western
\n ——-
\nDisclosure Schedule”), Western and Merger Sub jointly and severally represent
\n——————-
\nand warrant to Adaptive as follows:<\/p>\n
(a) Organization, Standing and Power; Subsidiaries.
\n ———————————————-<\/p>\n
(i) Western and each of its Subsidiaries (as defined in Section 8.11),
\nincluding Merger Sub, is a corporation or other organization duly organized,
\nvalidly existing and in good standing under the laws of its jurisdiction of
\nincorporation or organization, has the requisite power and authority to own,
\nlease and operate its properties and to carry on its business as now being
\nconducted, and is duly qualified and in good standing to do business in each
\njurisdiction in which the nature of its business or the ownership or leasing of
\nits properties makes such qualification necessary other than in such
\njurisdictions where the failure so to qualify or to be in good standing,
\nindividually or in the aggregate, would not reasonably be expected to have a
\nMaterial Adverse Effect on Western or Merger Sub. The copies of the certificate
\nof incorporation and bylaws of Western and Merger Sub that were previously
\nfurnished or made available to Adaptive are true, complete and correct copies of
\nsuch documents as in effect on the date of this Agreement.<\/p>\n
(ii) Western has no Subsidiaries that as of the date of this Agreement
\nare Significant Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the
\nSecurities and Exchange Commission (the “SEC”)). All the outstanding shares of
\n —
\ncapital stock of, or other equity interests in, each such Significant Subsidiary
\nhave been duly authorized, validly issued and are fully paid and nonassessable
\nand are, except as set forth in such Registration Statement, owned directly or
\nindirectly by Western, free and clear of all pledges, claims, liens, charges,
\nencumbrances and security interests of any kind or nature whatsoever
\n(collectively “Liens”) and free of any other restriction (including any
\n —–
\nrestriction on the right to vote, sell or otherwise dispose of such capital
\nstock or other ownership interests), except for restrictions imposed by
\napplicable securities laws.<\/p>\n
(b) Capital Structure.
\n —————–<\/p>\n
9<\/p>\n
(i) As of October 31, 2000, the authorized capital stock of Western
\nconsists of (A) 200,000,000 shares of Western Common Stock, of which (v)
\n55,564,419 shares were issued and outstanding, (w) 42,000,000 shares were held
\nin treasury, (x) 12,137,728 shares were reserved for future issuance pursuant to
\noutstanding stock options and reserved for future grant under stock option
\nplans, (y) 1,000,000 shares were reserved for issuance pursuant to an employee
\nstock purchase plan; (B) 100,000,000 shares of Western Class B Common Stock, par
\nvalue $0.01 per share, of which no shares were issued and outstanding and (C)
\n25,000,000 shares of preferred stock, par value $0.01 per share, of which no
\nshares were issued and outstanding. From October 31, 2000 to the date of this
\nAgreement, there have been no issuances of shares of the capital stock of
\nWestern or any other securities of Western other than issuances of shares
\npursuant to options or rights outstanding as of October 31, 2000. Except as
\ndescribed in this Section 3.1(b) and except as set forth in Section 3.1(b) of
\nthe Western Disclosure Schedule, as of the date of this Agreement, no shares of
\ncapital stock of Western are reserved for any purpose. All issued and
\noutstanding shares of capital stock of Western are duly authorized, validly
\nissued, fully paid and nonassessable, and have not been issued in violation of
\n(nor are any of the authorized shares of capital stock of Western subject to)
\nany preemptive or similar rights created by statute, the certificate of
\nincorporation or bylaws of Western, or any agreement to which Western is a party
\nor bound.<\/p>\n
(ii) No bonds, debentures, notes or other indebtedness of Western
\nhaving the right to vote on any matters on which holders of capital stock of
\nWestern may vote are issued or outstanding.<\/p>\n
(iii) Except as set forth in this Section 3.1(b) and except as set
\nforth in Section 3.1(b) of the Western Disclosure Schedule, as of the date of
\nthis Agreement, there are no options, warrants or other rights, agreements,
\narrangements or commitments of any character to which Western or any of its
\nSignificant Subsidiaries is a party relating to the issued or unissued capital
\nstock of Western or any of its Significant Subsidiaries or obligating Western or
\nany of its Significant Subsidiaries to grant, issue or sell any shares of the
\ncapital stock of Western or any of its Significant Subsidiaries, by sale, lease,
\nlicense or otherwise. As of the date of this Agreement, there are no
\nobligations, contingent or otherwise, of Western or any of its Significant
\nSubsidiaries to repurchase, redeem or otherwise acquire any shares of Western
\nCommon Stock or other capital stock of Western or any of its Significant
\nSubsidiaries. Section 3.1(b)(iii) of the Western Disclosure Schedule sets forth
\na complete and correct list, as of October 31, 2000, of the number of shares of
\nWestern Common Stock subject to Western Stock Options and the exercise price of
\nthe outstanding Western Stock Options referenced therein.<\/p>\n
(iv) Shareholders of Western Common Stock have the right to vote on
\nall matters put forth to the shareholders of Western.<\/p>\n
(v) The authorized capital stock of Merger Sub consists of 1,000
\nshares of Merger Sub Common Stock. As of the date of this Agreement, 100 shares
\nof Merger Sub Common Stock were issued and outstanding and held by Western, all
\nof which are duly authorized, validly issued, fully paid and nonassessable and
\nnot subject to preemptive rights created by statute, Merger Sub’s certificate of
\nincorporation or bylaws or any agreement to which Merger Sub is a party or is
\nbound.<\/p>\n
10<\/p>\n
(vi) The shares of Western Common Stock to be issued pursuant to the
\nMerger will be duly authorized, validly issued, fully paid and nonassessable and
\nnot subject to preemptive rights created by statute, Western’s certificate of
\nincorporation or bylaws or any agreement to which Western is a party or is
\nbound.<\/p>\n
(c) Authority; No Conflicts.
\n ———————–<\/p>\n
(i) Western and Merger Sub have all requisite corporate power and
\nauthority to enter into this Agreement and to consummate the transactions
\ncontemplated hereby, subject, in the case of the consummation of the Merger, to
\nthe Western Stockholder Approval. The execution and delivery of this Agreement
\nand the consummation of the transactions contemplated hereby have been duly
\nauthorized by all necessary corporate action on the part of Western and Merger
\nSub and no other corporate proceedings on the part of Western or Merger Sub are
\nnecessary to authorize the execution and delivery of this Agreement or to
\nconsummate the Merger and the other transactions contemplated hereby, subject in
\nthe case of the shares of Western common stock to be issued upon consummation of
\nthe Merger, to the Western Stockholder Approval. This Agreement has been duly
\nexecuted and delivered by Western and Merger Sub and constitutes a valid and
\nbinding agreement of Western and Merger Sub, enforceable against each of Western
\nand Merger Sub in accordance with its terms, except as such enforceability may
\nbe limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
\nmoratorium and similar laws relating to or affecting creditors generally or by
\ngeneral equity principles (regardless of whether such enforceability is
\nconsidered in a proceeding in equity or at law). Western has all requisite
\ncorporate power and authority to enter into the Stock Option Agreements and to
\nconsummate the transactions contemplated thereby. The execution and delivery of
\nthe Stock Option Agreements and the consummation of the transactions
\ncontemplated thereby have been duly authorized by all necessary corporate action
\non the part of Western and no other corporate proceedings on the part of Western
\nare necessary to authorize the execution and delivery of the Stock Option
\nAgreements or to consummate the transactions contemplated thereby. The Stock
\nOption Agreements have been duly executed and delivered by Western and each
\nconstitutes a valid and binding agreement of Western, enforceable against it in
\naccordance with its terms, except as such enforceability may be limited by
\nbankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
\nsimilar laws relating to or affecting creditors generally or by general equity
\nprinciples (regardless of whether such enforceability is considered in a
\nproceeding in equity or at law).<\/p>\n
(ii) The execution and delivery of this Agreement by Western and
\nMerger Sub and the Stock Option Agreements by Western do not, and the
\nconsummation by Western and Merger Sub of the Merger and the other transactions
\ncontemplated hereby and thereby will not, conflict with, or result in any
\nviolation of, or constitute a default (with or without notice or lapse of time,
\nor both) under, or give rise to a right of, or result by its terms in the
\ntermination, amendment, cancellation or acceleration of any obligation or the
\nloss of a material benefit under, or the creation of a Lien, charge, “put” or
\n“call” right or other encumbrance on, or the loss of, any assets, including
\nIntellectual Property (any such conflict, violation, default, right of
\ntermination, amendment, cancellation or acceleration, loss or creation, a
\n“Violation”) pursuant to: (A) any provision of the certificate of incorporation
\n ———
\nor bylaws or similar organizational document of Western, Merger Sub or any
\nSignificant Subsidiary of Western, or (B) except as (1) individually or in the
\naggregate, would not reasonably be expected to have a Material Adverse <\/p>\n
11<\/p>\n
Effect on Western or Merger Sub or (2) would not prevent or materially delay the
\nconsummation of the Merger, subject to obtaining or making the consents,
\napprovals, orders, authorizations, registrations, declarations and filings
\nreferred to in paragraph (iii) below, and except with respect to employee stock
\noptions and other awards, any loan or credit agreement, note, mortgage, bond,
\nindenture, lease, benefit plan or other agreement, obligation, instrument,
\npermit, concession, franchise, license, judgment, order, decree, statute, law,
\nordinance, rule or regulation applicable to Western, Merger Sub or any
\nSubsidiary of Western or their respective properties or assets.<\/p>\n
(iii) No consent, approval, order or authorization of, or
\nregistration, declaration or filing with, any supranational, national, state,
\nmunicipal, local or foreign government, any instrumentality, subdivision, court,
\nadministrative agency or commission or other authority thereof, or any quasi-
\ngovernmental or private body exercising any regulatory, taxing, importing or
\nother governmental or quasi-governmental authority (a “Governmental Entity”) or
\n ——————-
\nany other Person, is required by or with respect to Western, Merger Sub or any
\nSubsidiary of Western in connection with the execution and delivery of this
\nAgreement by Western or Merger Sub and the Stock Option Agreements by Western,
\nas applicable, or the consummation by Western and Merger Sub of the Merger and
\nthe other transactions contemplated hereby and thereby, except for those
\nrequired under or in relation to (A) the Hart-Scott-Rodino Antitrust
\nImprovements Act of 1976, as amended (the “HSR Act”), (B) state securities or
\n ——-
\n“blue sky” laws (the “Blue Sky Laws”), (C) the Securities Act of 1933, as
\n ————-
\namended (the “Securities Act”), (D) the Securities Exchange Act of 1934, as
\n ————–
\namended (the “Exchange Act”), (E) the DGCL with respect to the filing of the
\n ————
\nCertificate of Merger, (F) the rules and regulations of the NASDAQ, (G)
\nantitrust or other competition laws of other jurisdictions and (H) such
\nconsents, approvals, orders, authorizations, registrations, declarations and
\nfilings the failure of which to make or obtain, individually or in the
\naggregate, would not reasonably be expected to have a Material Adverse Effect on
\nWestern. Consents, approvals, orders, authorizations, registrations,
\ndeclarations and filings required under or in relation to any of the foregoing
\nclauses (A) through (G) are hereinafter referred to as “Necessary Consents”.
\n ——————<\/p>\n
(d) Reports and Financial Statements of Western.
\n ——————————————-<\/p>\n
(i) Western has filed all required registration statements,
\nprospectuses, reports, schedules, forms, statements and other documents required
\nto be filed by it with the SEC since August 1, 2000 (collectively, the “Western
\n ——-
\nSEC Reports”). No Subsidiary of Western is required to file any form, report,
\n———–
\nregistration statement, prospectus or other document with the SEC. None of the
\nWestern SEC Reports, as of their respective dates (and, if amended or superseded
\nby a filing prior to the date of this Agreement, then on the date of such
\nfiling), contained or will contain any untrue statement of a material fact or
\nomitted or will omit to state a material fact required to be stated therein or
\nnecessary to make the statements therein, in light of the circumstances under
\nwhich they were made, not misleading. Each of the financial statements
\n(including the related notes) included or incorporated by reference in the
\nWestern SEC Reports presents fairly, in all material respects, the consolidated
\nfinancial position and consolidated results of operations and cash flows of
\nWestern and its consolidated Subsidiaries as of the respective dates or for the
\nrespective periods set forth therein, all in conformity with United States
\ngenerally accepted accounting principles (“GAAP”) consistently applied during
\n —-
\nthe periods involved except as otherwise noted therein, and subject, in the case
\nof the unaudited interim financial statements of Western, to the absence of
\nnotes and normal year-end adjustments <\/p>\n
12<\/p>\n
that have not been and are not expected to be material in amount. All of such
\nWestern SEC Reports, as of their respective dates (and as of the date of any
\namendment to the respective Western SEC Report), complied as to form in all
\nmaterial respects with the applicable requirements of the Securities Act and the
\nExchange Act and the rules and regulations promulgated thereunder.<\/p>\n
(ii) Except as disclosed in the Western SEC Reports filed and
\npublicly available prior to the date hereof (the “Western Filed SEC Reports”)
\n ————————-
\nand except as set forth in Section 3.1(d)(ii) of the Western Disclosure
\nSchedule, Western and its Subsidiaries have not incurred any liabilities that
\nare of a nature that would be required to be disclosed on a balance sheet of
\nWestern and its Subsidiaries or the footnotes thereto prepared in conformity
\nwith GAAP, other than (A) liabilities incurred in the ordinary course of
\nbusiness, (B) liabilities incurred in accordance with Section 4.1, (C)
\nliabilities for Taxes (as defined in Section 8.11(k) or (D) liabilities that,
\nindividually or in the aggregate, would not reasonably be expected to have a
\nMaterial Adverse Effect on Western.<\/p>\n
(e) Information Supplied.
\n ——————–<\/p>\n
(i) None of the information supplied or to be supplied by Western
\nfor inclusion or incorporation by reference in (A) the Form S-4 (as defined in
\nSection 5.1) will, at the time the Form S-4 is filed with the SEC, at any time
\nit is amended or supplemented or at the time it becomes effective under the
\nSecurities Act, contain any untrue statement of a material fact or omit to state
\nany material fact required to be stated therein or necessary to make the
\nstatements therein, in light of the circumstances under which they were made,
\nnot misleading and (B) the Joint Proxy Statement\/Prospectus (as defined in
\nSection 5.1) will, on the date it is first mailed to Adaptive stockholders or
\nWestern stockholders or at the time of the Adaptive Stockholders Meeting or the
\nWestern Stockholders Meeting (each as defined in Section 5.1), contain any
\nuntrue statement of a material fact or omit to state any material fact required
\nto be stated therein or necessary in order to make the statements therein, in
\nlight of the circumstances under which they were made, not misleading. The Form
\nS-4 and the Joint Proxy Statement\/Prospectus will comply as to form in all
\nmaterial respects with the requirements of the Exchange Act and the Securities
\nAct and the rules and regulations of the SEC thereunder.<\/p>\n
(ii) Notwithstanding the foregoing provisions of this Section
\n3.1(e), no representation or warranty is made by Western with respect to
\nstatements made or incorporated by reference in the Form S-4 or the Joint Proxy
\nStatement\/Prospectus based on information supplied by Adaptive for inclusion or
\nincorporation by reference therein.<\/p>\n
(f) Board Approvals.
\n ————–<\/p>\n
(i) Western Board Approval. The Board of Directors of Western, by
\n ———————-
\nresolutions duly adopted by unanimous vote of those voting at a meeting duly
\ncalled and held and not subsequently rescinded or modified in any way (the
\n“Western Board Approval”), has duly (A) determined that this Agreement and the
\n ———————-
\nMerger and the Western Stock Option Agreement are fair to and in the best
\ninterests of Western and its stockholders and declared this Agreement and the
\nMerger to be advisable, (B) approved this Agreement, the Western Stock Option
\nAgreement, the WMC Holding Voting Agreement and the Merger and the consummation<\/p>\n
13<\/p>\n
of the transactions contemplated hereby and (C) declared it advisable that the
\nstockholders of Western approve the issuance of Western Common Stock pursuant to
\nthis Agreement and directed that such matter be submitted for consideration by
\nWestern’s stockholders at the Western Stockholders Meeting. The Western Board
\nApproval constitutes approval of this Agreement, the Western Stock Option
\nAgreement, the WMC Holding Voting Agreement and the Merger for purposes of
\nSection 203 of the DGCL. To the knowledge of Western, except for Section 203 of
\nthe DGCL (the prohibitions on “business combinations” of which have been
\nrendered inapplicable by the approval described in clause (B) above), no state
\ntakeover statute is applicable to this Agreement, the Western Stock Option
\nAgreement, the WMC Holding Voting Agreement or the Merger or the other
\ntransactions contemplated hereby.<\/p>\n
(ii) Merger Sub Board Approvals. The Board of Directors of Merger
\n ————————–
\nSub, by resolutions duly adopted by unanimous vote of those voting at a meeting
\nduly called and held and not subsequently rescinded or modified in any way (the
\n“Merger Sub Board Approval”), has duly (A)? determined that this Agreement and
\n ————————-
\nthe Merger are fair to and in the best interests of Merger Sub and its
\nstockholders and declared the Agreement and the Merger to be advisable, and??
\n(B)? approved this Agreement and the Merger by the approval described in clause
\n(C) above. The Merger Sub Board Approval constitutes approval of this Agreement
\nand the Merger for purposes of Section 203 of the DGCL. To the knowledge of
\nMerger Sub, no state takeover statute is applicable to this Agreement or the
\nMerger or the other transactions contemplated hereby.<\/p>\n
(g) Votes Required. The Western Stockholder Approval as required by
\n ————–
\nthe rules of the NASDAQ is the only vote of the holders of any class or series
\nof Western capital stock necessary to approve or adopt this Agreement and the
\nMerger and to consummate the Merger and the other transactions contemplated
\nhereby. The vote of Western is the only vote of the holders of any class or
\nseries of Merger Sub capital stock necessary to approve or adopt this Agreement
\nand the Merger and to consummate the Merger and the other transactions
\ncontemplated hereby.<\/p>\n
(h) Litigation; Compliance with Laws.
\n ——————————–<\/p>\n
(i) There are no suits, actions, judgments or proceedings
\n(collectively, “Actions”) pending or, to the knowledge of Western, threatened,
\n ——-
\nagainst or affecting Western or any Subsidiary of Western or any property or
\nasset of Western or any Subsidiary of Western which, individually or in the
\naggregate, would reasonably be expected to have a Material Adverse Effect on
\nWestern, nor are there any judgments, decrees, injunctions, rules or orders of
\nany Governmental Entity or arbitrator outstanding against Western or any
\nSubsidiary of Western which, individually or in the aggregate, would reasonably
\nbe expected to have a Material Adverse Effect on Western.<\/p>\n
(ii) Except as, individually or in the aggregate, would not
\nreasonably be expected to have a Material Adverse Effect on Western, Western and
\nits Subsidiaries hold all permits, licenses, franchises, variances, exemptions,
\norders and approvals of all Governmental Entities which are necessary for the
\noperation of the businesses as now being conducted of Western and its
\nSubsidiaries, taken as a whole (the “Western Permits”), and no suspension or
\n —————
\ncancellation of any of the Western Permits is pending or, to the knowledge of
\nWestern,<\/p>\n
14<\/p>\n
threatened. Western and its Subsidiaries are in compliance with the terms of the
\nWestern Permits, except where the failure to so comply, individually or in the
\naggregate, would not reasonably be expected to have a Material Adverse Effect on
\nWestern. Neither Western nor its Subsidiaries is in violation of, and Western
\nand its Subsidiaries have not received any notices of violations with respect
\nto, any laws, statutes, ordinances, rules or regulations of any Governmental
\nEntity, except for violations that, individually or in the aggregate, would not
\nreasonably be expected to have a Material Adverse Effect on Western.<\/p>\n
(i) Absence of Certain Changes or Events. Except for liabilities
\n ————————————
\npermitted to be incurred in accordance with this Agreement or the transactions
\ncontemplated hereby, since December 31, 1999, Western and its Subsidiaries
\n(including Merger Sub) have conducted their business only in the ordinary course
\nand in a manner consistent with past practice and, since June 30, 2000, there
\nhave not been any changes, circumstances or events which, individually or in the
\naggregate, have had, or would reasonably be expected to have, a Material Adverse
\nEffect on Western.<\/p>\n
(j) Intellectual Property. Section 3.1(j) of the Western Disclosure
\n ———————
\nSchedule sets forth, with respect to the Intellectual Property (as defined
\nbelow) owned, held or used by Western or its Subsidiaries (“Western IP”), all
\n ———-
\npatents, registrations and applications relating thereto, all material
\nunregistered Western IP and each and every material license, sublicense,
\nconsent-to-use agreement and other agreement concerning Western IP to which
\nWestern and\/or any of its Subsidiaries is a party (“Western IP Licenses”).
\n ——————-
\nExcept as disclosed in Section 3.1(j) of the Western Disclosure Schedule, (i)
\nWestern and\/or any of its Subsidiaries owns or has the right to use all the
\nmaterial Intellectual Property necessary or desirable for Western and its
\nsubsidiaries to conduct their business as is currently conducted and consistent
\nwith past practice; (ii) all of the Western IP is valid, enforceable and
\nunexpired, is free of Liens, and has not been abandoned; (iii) to Western’s
\nknowledge, the Western IP does not infringe or otherwise impair the Intellectual
\nProperty of any third party and is not being infringed or impaired by any third
\nparty; (iv) no action, suit, proceeding, arbitration, judgment, decree,
\nsettlement, injunction, rule or order is pending or has been rendered or, to the
\nbest knowledge of Western, is threatened by any Governmental Entity which would
\nlimit, cancel or question the validity, enforceability, ownership or use of any
\nWestern IP; (v) Western takes all reasonable steps to protect, maintain and
\nsafeguard the Western IP, including executing all appropriate confidentiality
\nagreements, and has made all filings and executed all agreements necessary or
\ndesirable in connection therewith; (vi) no party to a Western IP License is, or
\nis alleged to be, in breach or default thereunder; (vii) the transactions
\ncontemplated by this Agreement shall in no way impair or limit the rights of
\nWestern or any of its subsidiaries under any Western IP License, or cause any
\npayments to be due thereunder. For the purposes of this Agreement, “Intellectual
\n ————
\nProperty” shall mean all U.S., state and foreign intellectual property,
\n——–
\nincluding without limitation all (i) (a) inventions, discoveries, processes,
\ndesigns, techniques, developments, technology, and related improvements and
\nknow-how, whether or not patented or patentable; (b) copyrights and works of
\nauthorship in any media, including computer programs, software, databases and
\nrelated items, graphics, artwork, photography, advertising and promotional
\nmaterials (including graphics and text), designs, proprietary or copyrightable
\nelements of pictorial, graphic or sculptural works, functional or utilitarian
\nobjects or items of clothing, Internet site content, and all other authors’
\nrights, including “moral rights”; (c) trademarks, service marks, trade names,
\nbrand names, corporate names, domain names, logos, trade dress and all elements
\nthereof, the goodwill of any <\/p>\n
15<\/p>\n
business symbolized thereby, and all common-law rights relating thereto; (d)
\ntrade secrets and other confidential information; (ii) all registrations,
\napplications, recordings, and licenses or other agreements related thereto;
\n(iii) all rights to obtain renewals, extensions, continuations,
\ncontinuations-in-part, reissues, divisions or similar legal protections related
\nthereto; and rights to bring an action at law or in equity for the infringement
\nor other impairment of the foregoing before the Closing Date, including the
\nright to receive all proceeds and damages therefrom.<\/p>\n
(k) Opinion of Western Financial Advisor. Western has received the
\n ————————————
\nopinion of Credit Suisse First Boston Corporation, dated the date of this
\nAgreement, to the effect that, as of such date, the Exchange Ratio is fair to
\nWestern, from a financial point of view. A copy of such opinion will be made
\navailable to Adaptive promptly after the date of this Agreement.<\/p>\n
(l) Taxes. Each of Western and its Subsidiaries has filed all material
\n —–
\nTax Returns required to have been filed (or extensions have been duly obtained),
\nhas paid all material Taxes required to have been paid by it (whether or not
\nshown as due on any Tax Return), and has established an adequate accrual for all
\nmaterial Taxes not yet due or payable; (ii) all material Tax Returns filed by
\nWestern and its Subsidiaries are true, complete and correct in all material
\nrespects; (iii) no material claim for unpaid Taxes has become a lien against the
\nproperty of Western or any of its Subsidiaries or is being asserted against
\nWestern or any of its Subsidiaries; (iv) no audit or other proceeding with
\nrespect to any material Taxes due from Western or any of its Subsidiaries or any
\nTax Return of Western or any of its Subsidiaries is pending or threatened in
\nwriting, or being conducted by a Tax authority; (v) no consent under Section
\n341(f) of the Code has been filed with respect to the Western or any of its
\nSubsidiaries; (vi) all material Taxes required to be withheld, collected or
\ndeposited by or with respect to Western and each of its Subsidiaries have been
\ntimely withheld, collected or deposited, as the case may be, and, to the extent
\nrequired, have been paid to the relevant taxing authority; (vii) none of Western
\nor any of its Subsidiaries has been a party to any distribution occurring during
\nthe last two years in which the parties to such distribution treated the
\ndistribution as one to which section 355 of the Code is applicable; (viii) none
\nof Western or any of its Subsidiaries has agreed to make or is required to make
\nany adjustment under section 481(a) of the Code by reason of a change in
\naccounting method or otherwise; (ix) none of Western or any of its Subsidiaries
\nis a party to, is bound by or has any obligation under, any Tax sharing
\nagreement or similar contract or arrangement; (x) no closing agreement pursuant
\nto section 7121 of the Code (or any similar provision of state, local or foreign
\nlaw) has been entered into by or with respect to Western or any of its
\nSubsidiaries; (xi) neither Western nor any of its Subsidiaries is a party to any
\nagreement providing for the allocation or sharing of Taxes; (xii) neither
\nWestern nor its Subsidiaries has any liability for Taxes of any Person (other
\nthan a liability of Western for Taxes of any of its Subsidiaries or a liability
\nof any of Western’s. Subsidiaries for Taxes of Western under Regulation 1.1502-6
\n(or similar provisions of state, local or foreign law), as a transferee or
\nsuccessor, by contract or otherwise; and (xiii) neither Western nor any of its
\nSubsidiaries has made any payment or may be obligated to make any payment (by
\ncontract or otherwise) which will not be deductible by reason of Section 162(m)
\nof the Code.<\/p>\n
(m) Certain Contracts. All “material contracts” (as such term is defined
\n —————–
\nin Item 601(b)(10) of Regulation S-K of the SEC) to which Western or any of its
\nSubsidiaries is a party to or bound by, including all written agreements with
\ncustomers providing for future sales in excess of $1,000,000, are valid and in
\nfull force and effect except to the extent they have <\/p>\n
16<\/p>\n
previously expired in accordance with their terms or if the failure to be in
\nfull force and effect, individually or in the aggregate, would not reasonably be
\nexpected to have a Material Adverse Effect on Western. Neither Western nor any
\nof its Subsidiaries has violated any provision of, or committed or failed to
\nperform any act which, with or without notice, lapse of time or both, would
\nconstitute a default under the provisions of, any contract described in the
\nfirst sentence of this paragraph, except in each case for those violations and
\ndefaults which, individually or in the aggregate, would not reasonably be
\nexpected to result in a Material Adverse Effect on Western. Schedule 3.1(m) of
\nthe Western Disclosure Schedule sets forth the contracts described in the first
\nsentence of this paragraph that give rise to a right of the other parties
\nthereto to terminate such contract, to a right of first refusal or similar right
\nthereunder as a result of the execution and delivery of this Agreement and the
\nconsummation by Western of the Merger and the other transactions contemplated
\nhereby, or that could, after the Effective Time, restrict Western or any of its
\nAffiliates or any successor thereto, from engaging or competing in any line of
\nbusiness or in any geographic area.<\/p>\n
(n) Employee Benefits.
\n —————–<\/p>\n
(i) Schedule 3.1(n) of the Western Disclosure Schedule contains a true<\/p>\n
and complete list of each written, formal “employee benefit plan” (within the
\nmeaning of section 3(3) of the Employee Retirement Income Security Act of 1974,
\nas amended (“ERISA”), including, without limitation, multiemployer plans within
\nthe meaning of ERISA section 3(37)), stock purchase, stock option, severance,
\nemployment, change-in-control, fringe benefit, bonus, incentive, deferred
\ncompensation and all other employee benefit plans, agreements, programs,
\npolicies or other arrangements, whether or not subject to ERISA (including any
\nfunding mechanism therefor now in effect or required in the future as a result
\nof the transaction contemplated by this Agreement or otherwise), whether legally
\nbinding or not, under which any employee or former employee of Western or any of
\nits Subsidiaries has any present or future right to benefits and under which
\nWestern or any of its Subsidiaries has any present or future liability. All such
\nplans, agreements, programs, policies and arrangements shall be collectively
\nreferred to as the “Western Benefit Plans”. Schedule 3.1(n)(i) of the Western
\n ———————
\nDisclosure Schedule lists each employment agreement in effect on the date of
\nthis Agreement.<\/p>\n
(ii) With respect to each Western Benefit Plan, Western has delivered or
\nmade available to Adaptive a current, accurate and complete copy (or, to the
\nextent no such copy exists, an accurate description) thereof and, to the extent
\napplicable: (A) any related trust agreement or other funding instrument; (B) the
\nmost recent determination letter, if applicable; (C) any current summary plan
\ndescription and other written communications (or a description of any oral
\ncommunications) by Western or any of its Subsidiaries within the last year to
\ntheir employees concerning the extent of the benefits provided under a Western
\nBenefit Plan; and (D) for the most recent available period, the Form 5500 and
\nattached schedules, audited financial statements, actuarial valuation reports
\nand attorney’s response to an auditor’s request for information.<\/p>\n
(iii) (A) Each Western Benefit Plan has been established and administered
\nin accordance with its terms, and in substantial compliance with the applicable
\nprovisions of ERISA, the Code and other applicable laws, rules and regulations;
\n(B) each Western Benefit <\/p>\n
17<\/p>\n
Plan which is intended to be qualified within the meaning of Code section 401(a)
\nis so qualified and has received a favorable determination letter as to its
\nqualification, and nothing has occurred, whether by action or failure to act,
\nthat could reasonably be expected to cause the loss of such qualification; (C)
\n no event has occurred and no condition exists that would subject Western or
\nany of its Subsidiaries, either directly or by reason of their affiliation with
\nany member of their “Controlled Group” (defined as any organization which is a
\n —————-
\nmember of a controlled group of organizations within the meaning of Code
\nsections 414(b), (c), (m) or (o)), to any material tax, fine, lien, penalty or
\nother liability imposed by ERISA, the Code or other applicable laws, rules and
\nregulations; (D) for each Western Benefit Plan with respect to which a Form
\n5500 has been filed, no material change has occurred with respect to the matters
\ncovered by the most recent Form since the date thereof; (E) neither Western
\nnor any of its Subsidiaries has engaged in a transaction with respect to any
\nWestern Benefit Plan that, assuming the taxable period of such transaction
\nexpired as of the date hereof, could subject the Company or any subsidiary to a
\ntax or penalty imposed by either Section 4975 of the Code or Section 502(i) of
\nERISA in an amount which would be material; (F) no Western Benefit Plan provides
\nretiree welfare benefits and neither Western nor any of its Subsidiaries have
\nany obligation to provide any retiree welfare benefits other than as required by
\nSection 4980B of the Code; and (G) neither Western nor any member of its
\nControlled Group has engaged in, or is a successor or parent corporation to an
\nentity that has engaged in, a transaction described in Sections 4069 or 4212(c)
\nof ERISA.<\/p>\n
(iv) No Western Benefit Plan is subject to Title IV of ERISA.<\/p>\n
(v) With respect to any Western Benefit Plan, (A) no actions, suits or
\nclaims (other than routine claims for benefits in the ordinary course) are
\npending or, to the knowledge of Western, threatened and (B) no facts or
\ncircumstances exist to the knowledge of Western that could reasonably be
\nexpected to give rise to any such actions, suits or claims.<\/p>\n
(vi) Except as set forth on Schedule 3.1(n), no Western Benefit Plan
\nexists that could result in the payment to any present or former employee of
\nWestern or any of its Subsidiaries of any money or other property or accelerate
\nor provide any other rights or benefits to any present or former employee of
\nWestern or any of its Subsidiaries as a result of the transaction contemplated
\nby this Agreement. Except as set forth on Schedule 3.1(n), there is no contract,
\nplan or arrangement (written or otherwise) covering any employee or former
\nemployee of Western or any of its Subsidiaries that, individually or
\ncollectively, could give rise to the payment of any amount that would not be
\ndeductible pursuant to the terms of Section 280G of the Code.<\/p>\n
(o) Insurance. All primary, excess and umbrella policies, bonds and
\n ———
\nother forms of insurance currently owned or held by or on behalf of and\/or
\nproviding insurance coverage to Western and its Subsidiaries and their
\nrespective directors, officers, agents and employees are in full force and
\neffect, except for any such forms of insurance the absence of which would not
\nlikely have a Material Adverse Effect on Western. Western has not received a
\nnotice of default under any such policy and has not received written notice of
\nany pending or threatened termination or cancellation, coverage limitation or
\nreduction, or material premium increase with respect to any such policy. No
\nletters of credit have been posted and no cash has been restricted to support
\nany reserves for insurance.<\/p>\n
18<\/p>\n
(p) Properties. Except for properties and assets disposed of in the
\n ———-
\nordinary course of business consistent with past practices since June 30, 2000,
\nWestern and its Significant Subsidiaries have good and marketable title, free
\nand clear of all liabilities and liens, to all their material properties and
\nassets, whether tangible or intangible, real, personal or mixed. All material
\nbuildings, fixtures, equipment and other property and assets held under leases
\nby Western or any of its Significant Subsidiaries are held under valid
\ninstruments enforceable by Western or such Significant Subsidiary in accordance
\nwith their respective terms. Substantially all of Western’s and its Significant
\nSubsidiaries’ equipment in regular use has been well maintained and is in good
\nand serviceable condition, reasonable wear and tear excepted.<\/p>\n
(q) Customers and Suppliers. Except as set forth in Part II of
\n ———————–
\nSection 3.1(q) of the Western Disclosure Schedule, Western reasonably believes
\nthat its relationships with its suppliers and customers are satisfactory. Except
\nas set forth in Part II of Section 3.1(q) of the Western Disclosure Schedule, as
\nof the date of this Agreement, Western believes, based on its inquiry of the
\nWestern Named Executives (defined below), that the estimates contained in Part I
\nof Schedule 3.1(q) for the customers named therein (the “Western Named
\n ————-
\nCustomers”) are reasonable under the circumstances. Except as set forth in Part
\n———
\nII of Section 3.1(q) of the Western Disclosure Schedule, as of the date of this
\nAgreement, nothing has come to the attention of the Western Named Executives,
\nincluding any written or email correspondence from customers or from other
\nemployees of Western, that, taken in the aggregate together with all other
\navailable information relating to such Western Named Customers, causes such
\nWestern Named Executives to believe that Part I of Schedule 3.1(q) is
\nunreasonable. For purposes of this paragraph 3.1(q), “Western Named Executives”
\n ————————
\nmeans Jonathan Zakin, Amir Zoufonoun and Nancy Huber. As of the date of this
\nAgreement, none of the Western Named Customers has terminated or canceled its
\nagreement with Western.<\/p>\n
(r) Brokers or Finders. No agent, broker, investment banker,
\n ——————
\nfinancial advisor or other firm or Person is or will be entitled to any broker’s
\nor finder’s fee or any other similar commission or fee in connection with any of
\nthe transactions contemplated by this Agreement based upon arrangements made by
\nor on behalf of Western, except for (x) Credit Suisse First Boston Corporation,
\n(y) Ripplewood Holdings LLC and (z) Leeward Technology Partners, whose fees and
\nexpenses in each case will be paid by Western.<\/p>\n
3.2 Representations and Warranties of Adaptive.
\n ——————————————<\/p>\n
Except as disclosed in the Adaptive Filed SEC Reports (as defined in
\nSection 3.2(d)(ii)) or as set forth in the Adaptive Disclosure Schedule
\ndelivered by Adaptive to Western prior to the execution of this Agreement (the
\n“Adaptive Disclosure Schedule”), Adaptive represents and warrants to Western as
\n —————————-
\nfollows:<\/p>\n
(a) Organization, Standing and Power; Subsidiaries.
\n ———————————————-<\/p>\n
(i) Adaptive is a corporation duly organized, validly existing and in
\ngood standing under the laws of the State of Delaware and has the requisite
\npower and authority to own, lease and operate its properties and to carry on its
\nbusiness as now being conducted. Each Subsidiary of Adaptive is a corporation or
\nother organization duly organized, validly existing and in good standing under
\nthe laws of its jurisdiction of incorporation or organization, has the <\/p>\n
19<\/p>\n
requisite power and authority to own, lease and operate its properties and to
\ncarry on its business as is now being conducted, except where the failure to be
\nso organized, existing and in good standing or to have such power and authority,
\nindividually or in the aggregate, would not reasonably be expected to have a
\nMaterial Adverse Effect on Adaptive, and is duly qualified and in good standing
\nto do business in each jurisdiction in which the nature of its business or the
\nownership or leasing of its properties makes such qualification necessary other
\nthan in such jurisdictions where the failure so to qualify or to be in good
\nstanding, individually or in the aggregate, would not reasonably be expected to
\nhave a Material Adverse Effect on Adaptive. The copies of the certificate of
\nincorporation and bylaws of Adaptive, which were previously furnished or made
\navailable to Western, are true, complete and correct copies of such documents as
\nin effect on the date of this Agreement.<\/p>\n
(ii) Section 3.2(a)(ii) of the Adaptive Disclosure Schedule lists
\n —-
\nall the Significant Subsidiaries of Adaptive as of the date of this Agreement.
\nAll the outstanding shares of capital stock of, or other equity interests in,
\neach such Significant Subsidiary have been duly authorized, validly issued and
\nare fully paid and nonassessable and are owned directly or indirectly by
\nAdaptive, free and clear of all Liens and free of any other restriction
\n(including any restriction on the right to vote, sell or otherwise dispose of
\nsuch capital stock or other ownership interests), except for restrictions
\nimposed by applicable securities laws.<\/p>\n
(b) Capital Structure.
\n —————–<\/p>\n
(i) As of October 31, 2000, the authorized capital stock of
\nAdaptive consists of (A) 250,000,000 shares of Adaptive Common Stock of which
\n249,200,000 have been designated Adaptive Common Stock and 800,000 have been
\ndesignated Adaptive Series A Junior Common Stock; as of November 9, 2000,
\n37,698,603 shares of Adaptive Common Stock were issued and outstanding and no
\nshares of Adaptive Series A Junior Common Stock were issued and outstanding; and
\n(B) 5,000,000 shares of preferred stock, par value $0.10 per share, none of
\nwhich are issued or outstanding and all of which have been reserved for issuance
\nupon exercise of rights (the “Adaptive Rights”) distributed to holders of
\n —————
\nAdaptive Common Stock pursuant to a Rights Agreement, dated as of June 17, 1999,
\nbetween Adaptive and Bank Boston, N.A., as Rights Agent, as amended (the
\n“Adaptive Rights Agreement”). From October 31, 2000 to the date of this
\n ————————-
\nAgreement, there have been no issuances of shares of the capital stock of
\nAdaptive or any other securities of Adaptive other than issuances of shares
\npursuant to options or rights outstanding as of October 31, 2000. All issued and
\noutstanding shares of the capital stock of Adaptive are duly authorized, validly
\nissued, fully paid and nonassessable, and free of any preemptive rights. None of
\nthe Subsidiaries of Adaptive own any shares of Adaptive capital stock.<\/p>\n
(ii) No bonds, debentures, notes or other indebtedness of Adaptive
\nhaving the right to vote on any matters on which holders of capital stock of
\nAdaptive may vote (“Adaptive Voting Debt”) are issued or outstanding.
\n ——————–<\/p>\n
(iii) Except as set forth in this Section 3.2(b), as of the date of
\nthis Agreement, there are no options, warrants or other rights, agreements,
\narrangements or commitments of any character to which Adaptive or any of its
\nSignificant Subsidiaries is a party relating to the issued or unissued capital
\nstock of Adaptive or any of its Significant Subsidiaries or obligating Adaptive<\/p>\n
20<\/p>\n
or any of its Significant Subsidiaries to grant, issue or sell any shares of the
\ncapital stock of Adaptive or any of its Significant Subsidiaries, by sale,
\nlease, license or otherwise. As of the date of this Agreement, there are no
\nobligations, contingent or otherwise, of Adaptive or any of its Significant
\nSubsidiaries to repurchase, redeem or otherwise acquire any shares of Adaptive
\nCommon Stock or other capital stock of Adaptive or any of its Significant
\nSubsidiaries. The options and other rights to acquire Adaptive Common Stock from
\nAdaptive representing the right to purchase shares of Adaptive Common Stock,
\ntogether with other employee stock options issued by Adaptive after the date
\nhereof in accordance with the Adaptive Stock Option Plans (as defined in the
\nnext sentence) and Section 4.2, are referred to herein collectively as the
\n“Adaptive Stock Options”). The Adaptive Stock Options have been granted under
\n ———————-
\nthe 1992 Stock Option Plan of Adaptive Broadband Corporation and the California
\nMicrowave, Inc. 1986 Stock Option Plan (collectively, the “Adaptive Stock Option
\n ———————
\nPlans”). Section 3.2(b)(iii) of the Adaptive Disclosure Schedule sets forth a
\n—–
\ncomplete and correct list, as of the dates set forth therein, of the number of
\nshares of Adaptive Common Stock subject to Adaptive Stock Options and the
\nexercise price of the outstanding Adaptive Stock Options referenced therein.<\/p>\n
(c) Authority; No Conflicts.
\n ———————–<\/p>\n
(i) Adaptive has all requisite corporate power and authority to enter
\ninto this Agreement and to consummate the transactions contemplated hereby,
\nsubject, in the case of the consummation of the Merger, to the Adaptive
\nStockholder Approval. The execution and delivery of this Agreement and the
\nconsummation of the transactions contemplated hereby have been duly authorized
\nby all necessary corporate action on the part of Adaptive and no other corporate
\nproceedings on the part of Adaptive are necessary to authorize the execution and
\ndelivery of the Agreement or to consummate the Merger and the other transactions
\ncontemplated hereby, subject in the case of the consummation of the Merger, to
\nthe Adaptive Stockholder Approval. This Agreement has been duly executed and
\ndelivered by Adaptive and constitutes a valid and binding agreement of Adaptive,
\nenforceable against Adaptive in accordance with its terms, except as such
\nenforceability may be limited by bankruptcy, insolvency, fraudulent transfer,
\nreorganization, moratorium and similar laws relating to or affecting creditors
\ngenerally or by general equity principles (regardless of whether such
\nenforceability is considered in a proceeding in equity or at law). Adaptive has
\nall requisite corporate power and authority to enter into the Stock Option
\nAgreements and to consummate the transactions contemplated thereby. The
\nexecution and delivery of the Stock Option Agreements and the consummation of
\nthe transactions contemplated thereby have been duly authorized by all necessary
\ncorporate action on the part of Adaptive and no other corporate proceedings on
\nthe part of Adaptive are necessary to authorize the execution and delivery of
\nthe Stock Option Agreements or to consummate the transactions contemplated
\nthereby. The Stock Option Agreements have been duly executed and delivered by
\nAdaptive and each constitutes a valid and binding agreement of Adaptive,
\nenforceable against it in accordance with its terms, except as such
\nenforceability may be limited by bankruptcy, insolvency, fraudulent transfer,
\nreorganization, moratorium and similar laws relating to or affecting creditors
\ngenerally or by general equity principles (regardless of whether such
\nenforceability is considered in a proceeding in equity or at law).<\/p>\n
(ii) The execution and delivery of this Agreement by Adaptive does
\nnot, and the consummation by Adaptive of the Merger and the other transactions
\ncontemplated hereby will not, conflict with, or result in a Violation pursuant
\nto: (A) any provision of the certificate of<\/p>\n
21<\/p>\n
incorporation or bylaws or similar organizational document of Adaptive or any
\nSignificant Subsidiary of Adaptive or (B) except as (1) individually or in the
\naggregate, would not reasonably be expected to have a Material Adverse Effect on
\nAdaptive or (2) would not prevent or materially delay the consummation of the
\nMerger, subject to obtaining or making the consents, approvals, orders,
\nauthorizations, registrations, declarations and filings referred to in paragraph
\n(iii) below and except with respect to employee stock options and other awards,
\nany loan or credit agreement, note, mortgage, bond, indenture, lease, benefit
\nplan or other agreement, obligation, instrument, permit, concession, franchise,
\nlicense, judgment, order, decree, statute, law, ordinance, rule or regulation
\napplicable to Adaptive or any Subsidiary of Adaptive or their respective
\nproperties or assets.<\/p>\n
(iii) No consent, approval, order or authorization of, or
\nregistration, declaration or filing with, any Governmental Entity or any other
\nPerson is required by or with respect to Adaptive or any Subsidiary of Adaptive
\nin connection with the execution and delivery of this Agreement or the Stock
\nOption Agreements by Adaptive or the consummation of the Merger and the other
\ntransactions contemplated hereby and thereby, except the Necessary Consents and
\nsuch consents, approvals, orders, authorizations, registrations, declarations
\nand filings the failure of which to make or obtain, individually or in the
\naggregate, would not reasonably be expected to have a Material Adverse Effect on
\nAdaptive.<\/p>\n
(d) Reports and Financial Statements.
\n ——————————–<\/p>\n
(i) Adaptive has filed all required registration statements,
\nprospectuses, reports, schedules, forms, statements and other documents required
\nto be filed by it with the SEC since December 31, 1997 (collectively, the
\n“Adaptive SEC Reports”). No Subsidiary of Adaptive is required to file any form,
\n ——————–
\nreport, registration statement, prospectus or other document with the SEC. None
\nof the Adaptive SEC Reports, as of their respective dates (and, if amended or
\nsuperseded by a filing prior to the date of this Agreement, then on the date of
\nsuch filing), contained or will contain any untrue statement of a material fact
\nor omitted or will omit to state a material fact required to be stated therein
\nor necessary to make the statements therein, in light of the circumstances under
\nwhich they were made, not misleading. Each of the financial statements
\n(including the related notes) included or incorporated by reference in the
\nAdaptive SEC Reports presents fairly, in all material respects, the consolidated
\nfinancial position and consolidated results of operations and cash flows of
\nAdaptive and its consolidated Subsidiaries as of the respective dates or for the
\nrespective periods set forth therein, all in conformity with GAAP consistently
\napplied during the periods involved except as otherwise noted therein, and
\nsubject, in the case of the unaudited interim financial statements of Adaptive,
\nto the absence of notes and normal year-end adjustments that have not been and
\nare not expected to be material in amount. All of such Adaptive SEC Reports, as
\nof their respective dates (and as of the date of any amendment to the respective
\nAdaptive SEC Report), complied as to form in all material respects with the
\napplicable requirements of the Securities Act and the Exchange Act and the rules
\nand regulations promulgated thereunder.<\/p>\n
(ii) Except as disclosed in the Adaptive SEC Reports filed and
\npublicly available prior to the date hereof (the “Adaptive Filed SEC Reports”)
\n ————————–
\nand except as set forth in Section 3.2(d)(ii) of the Adaptive Disclosure
\nSchedule, Adaptive and its Subsidiaries have not incurred any liabilities that
\nare of a nature that would be required to be disclosed on a balance<\/p>\n
22<\/p>\n
sheet of Adaptive and its Subsidiaries or the footnotes thereto prepared in
\nconformity with GAAP, other than (A) liabilities incurred in the ordinary course
\nof business, (B) liabilities incurred in accordance with Section 4.2, or (C)
\nliabilities for Taxes or (D) liabilities that, individually or in the aggregate,
\nwould not reasonably be expected to have a Material Adverse Effect on Adaptive.<\/p>\n
(e) Information Supplied.
\n ——————–<\/p>\n
(i) None of the information supplied or to be supplied by Adaptive
\nfor inclusion or incorporation by reference in (A) the Form S-4 will, at the
\ntime the Form S-4 is filed with the SEC, at any time it is amended or
\nsupplemented or at the time it becomes effective under the Securities Act,
\ncontain any untrue statement of a material fact or omit to state any material
\nfact required to be stated therein or necessary to make the statements therein,
\nin light of the circumstances under which they were made, not misleading, and
\n(B) the Joint Proxy Statement\/Prospectus will, on the date it is first mailed to
\nAdaptive stockholders or Western stockholders or at the time of the Adaptive
\nStockholders Meeting or the Western Stockholders Meeting, contain any untrue
\nstatement of a material fact or omit to state any material fact required to be
\nstated therein or necessary in order to make the statements therein, in light of
\nthe circumstances under which they were made, not misleading.<\/p>\n
(ii) Notwithstanding the foregoing provisions of this Section 3.2(e),
\nno representation or warranty is made by Adaptive with respect to statements
\nmade or incorporated by reference in the Form S-4 or the Joint Proxy
\nStatement\/Prospectus based on information supplied by Western for inclusion or
\nincorporation by reference therein.<\/p>\n
(f) Board Approval. The Board of Directors of Adaptive, by
\n ————–
\nresolutions duly adopted by unanimous vote of those voting at a meeting duly
\ncalled and held and not subsequently rescinded or modified in any way (the
\n“Adaptive Board Approval”), has duly (i) determined that this Agreement and the
\n ———————–
\nMerger and the Adaptive Stock Option Agreement are fair to and in the best
\ninterests of Adaptive and the holders of Adaptive Common Stock and declared the
\nAgreement and the Merger to be advisable, (ii) approved this Agreement, the
\nAdaptive Stock Option Agreement, the Merger and the consummation of the
\ntransactions contemplated hereby and (iii) declared it advisable that the
\nstockholders of Adaptive adopt this Agreement and directed that such matter be
\nsubmitted for consideration by Adaptive’s stockholders at the Adaptive
\nStockholders Meeting. The Adaptive Board Approval constitutes approval of this
\nAgreement, the Adaptive Stock Option Agreement and the Merger for purposes of
\nSection 203 of the DGCL. To the knowledge of Adaptive, except for Section 203 of
\nthe DGCL (the prohibitions on “business combinations” of which have been
\nrendered inapplicable by the approval in clause (ii) above), no state takeover
\nstatute is applicable to this Agreement or the Merger or the other transactions
\ncontemplated hereby or thereby. The Adaptive Board Approval constitutes the
\napproval of the “Disinterested Directors” of Adaptive (as such term is defined
\nin the Amended and Restated Certificate of Incorporation of Adaptive) for
\npurposes of Article IX of the Amended and Restated Certificate of Incorporation
\nof Adaptive.<\/p>\n
(g) Vote Required. The Adaptive Stockholder Approval is the only vote
\n ————-
\nof the holders of any class or series of Adaptive capital stock necessary to
\napprove or adopt this<\/p>\n
23<\/p>\n
Agreement and the Merger and to consummate the Merger and the other transactions
\ncontemplated hereby (the “Required Adaptive Vote)”.
\n ———————-<\/p>\n
(h) Litigation; Compliance with Laws.
\n ——————————–<\/p>\n
(i) There are no Actions pending or, to the knowledge of Adaptive,
\nthreatened, against or affecting Adaptive or any Subsidiary of Adaptive or any
\nproperty or asset of Adaptive or any Subsidiary of Adaptive which, individually
\nor in the aggregate, would reasonably be expected to have a Material Adverse
\nEffect on Adaptive, nor are there any judgments, decrees, injunctions, rules or
\norders of any Governmental Entity or arbitrator outstanding against Adaptive or
\nany Subsidiary of Adaptive which, individually or in the aggregate, would
\nreasonably be expected to have a Material Adverse Effect on Adaptive.<\/p>\n
(ii) Except as, individually or in the aggregate, would not reasonably
\nbe expected to have a Material Adverse Effect on Adaptive, Adaptive and its
\nSubsidiaries hold all permits, licenses, franchises, variances, exemptions,
\norders and approvals of all Governmental Entities which are necessary for the
\noperation of the businesses as now being conducted of Adaptive and its
\nSubsidiaries, taken as a whole (the “Adaptive Permits”), and no suspension or
\n —————-
\ncancellation of any of the Adaptive Permits is pending or, to the knowledge of
\nAdaptive, threatened. Adaptive and its Subsidiaries are in compliance with the
\nterms of the Adaptive Permits, except where the failure to so comply,
\nindividually or in the aggregate, would not reasonably be expected to have a
\nMaterial Adverse Effect on Adaptive. Neither Adaptive nor its Subsidiaries is in
\nviolation of, and Adaptive and its Subsidiaries have not received any notices of
\nviolations with respect to, any laws, statutes, ordinances, rules or regulations
\nof any Governmental Entity, except for violations that, individually or in the
\naggregate, would not reasonably be expected to have a Material Adverse Effect on
\nAdaptive.<\/p>\n
(i) Absence of Certain Changes or Events. Except for liabilities
\n ————————————
\npermitted to be incurred in accordance with this Agreement or the transactions
\ncontemplated hereby and except as described in the Adaptive SEC Reports, since
\nJune 30, 2000, Adaptive and its Subsidiaries have conducted their business only
\nin the ordinary course and in a manner consistent with past practice and, since
\nJune 30, 2000, there have not been any changes, circumstances or events which,
\nindividually or in the aggregate, have had, or would reasonably be expected to
\nhave, a Material Adverse Effect on Adaptive.<\/p>\n
(j) Intellectual Property. Section 3.2(j) of the Adaptive Disclosure
\n ———————
\nSchedule sets forth, with respect to the Intellectual Property (as defined in
\nSection 3.1(j)) owned, held or used by Adaptive or its Subsidiaries (“Adaptive
\n ——–
\nIP”), all patents, registrations and applications relating thereto, all material
\n—
\nunregistered Adaptive IP and each and every material license, sublicense,
\nconsent-to-use agreement and other agreement concerning Adaptive IP to which
\nAdaptive and\/or any of its Subsidiaries is a party (“Adaptive IP Licenses”).
\n ——————–
\nExcept as disclosed in Section 3.2(j) of the Adaptive Disclosure Schedule, (i)
\nAdaptive and\/or any of its Subsidiaries owns or has the right to use all the
\nmaterial Intellectual Property necessary or desirable for Adaptive and its
\nsubsidiaries to conduct their business as is currently conducted and consistent
\nwith past practice; (ii) all of the Adaptive IP is valid, enforceable and
\nunexpired, is free of Liens, and has not been abandoned; (iii) to Adaptive’s
\nknowledge, the Adaptive IP does not infringe or otherwise impair the
\nIntellectual Property of any third party and is not being <\/p>\n
24<\/p>\n
infringed or impaired by any third party; (iv) no action, suit, proceeding,
\narbitration, judgment, decree, settlement, injunction, rule or order is pending
\nor has been rendered or, to the best knowledge of Adaptive, is threatened by any
\nGovernmental Entity which would limit, cancel or question the validity,
\nenforceability, ownership or use of any Adaptive IP; (v) Adaptive takes all
\nreasonable steps to protect, maintain and safeguard the Adaptive IP, including
\nexecuting all appropriate confidentiality agreements, and has made all filings
\nand executed all agreements necessary or desirable in connection therewith; (vi)
\nno party to a Adaptive IP License is, or is alleged to be, in breach or default
\nthereunder; and (vii) the transactions contemplated by this Agreement shall in
\nno way impair or limit the rights of Adaptive or any of its subsidiaries under
\nany Adaptive IP License, or cause any payments to be due thereunder.<\/p>\n
(k) Opinion of Adaptive Financial Advisor. Adaptive has received the
\n ————————————-
\nopinion of Dain Rauscher Wessels, dated the date of this Agreement, to the
\neffect that, as of such date, the Exchange Ratio is fair, from a financial point
\nof view, to the holders of Adaptive Common Stock. A copy of such opinion will be
\nmade available to Western promptly after the date of this Agreement. <\/p>\n
25<\/p>\n
(l) Taxes. Each of Adaptive and its Subsidiaries has filed all
\n —–
\nmaterial Tax Returns required to have been filed (or extensions have been duly
\nobtained), has paid all material Taxes required to have been paid by it (whether
\nor not shown as due on any Tax Return), and has established an adequate accrual
\nfor all material Taxes not yet due or payable; (ii) all material Tax Returns
\nfiled by Adaptive and its Subsidiaries are true, complete and correct in all
\nmaterial respects; (iii) no material claim for unpaid Taxes has become a lien
\nagainst the property of Adaptive or any of its Subsidiaries or is being asserted
\nagainst Adaptive or any of its Subsidiaries; (iv) no audit or other proceeding
\nwith respect to any material Taxes due from Adaptive or any of its Subsidiaries
\nor any Tax Return of Adaptive or any of its Subsidiaries is pending or
\nthreatened in writing, or being conducted by a Tax authority; (v) no consent
\nunder Section 341(f) of the Code has been filed with respect to Adaptive or any
\nof its Subsidiaries; (vi) all material Taxes required to be withheld, collected
\nor deposited by or with respect to Adaptive and each of its Subsidiaries have
\nbeen timely withheld, collected or deposited, as the case may be, and, to the
\nextent required, have been paid to the relevant taxing authority; (vii) none of
\nAdaptive or any of its Subsidiaries has been a party to any distribution
\noccurring during the last two years in which the parties to such distribution
\ntreated the distribution as one to which section 355 of the Code is applicable;
\n(viii) none of Adaptive or any of its Subsidiaries has agreed to make or is
\nrequired to make any adjustment under section 481(a) of the Code by reason of a
\nchange in accounting method or otherwise; (ix) none of Adaptive or any of its
\nSubsidiaries is a party to, is bound by or has any obligation under, any Tax
\nsharing agreement or similar contract or arrangement; (x) no closing agreement
\npursuant to section 7121 of the Code (or any similar provision of state, local
\nor foreign law) has been entered into by or with respect to Adaptive or any of
\nits Subsidiaries; (xi) neither Adaptive nor any of its Subsidiaries is a party
\nto any agreement providing for the allocation or sharing of Taxes; (xii) neither
\nAdaptive nor its Subsidiaries has any liability for Taxes of any Person (other
\nthan a liability of Adaptive for Taxes of any of its Subsidiaries or a liability
\nof any of Adaptive’s. Subsidiaries for Taxes of Adaptive under Regulation
\n1.1502-6 (or similar provisions of state, local or foreign law), as a transferee
\nor successor, by contract or otherwise; and (xiii) neither Adaptive nor any of
\nits Subsidiaries has made any payment or may be obligated to make any payment
\n(by contract or otherwise) which will not be deductible by reason of Section
\n162(m) of the Code.<\/p>\n
(m) Certain Contracts. All “material contracts” (as such term is
\n —————–
\ndefined in Item 601(b)(10) of Regulation S-K of the SEC) to which Adaptive or
\nany of its Subsidiaries is a party to or bound by, including all written
\nagreements with customers providing for future sales in excess of $1,000,000,
\nare valid and in full force and effect except to the extent they have previously
\nexpired in accordance with their terms or if the failure to be in full force and
\neffect, individually or in the aggregate, would not reasonably be expected to
\nhave a Material Adverse Effect on Adaptive. Neither Adaptive nor any of its
\nSubsidiaries has violated any provision of, or committed or failed to perform
\nany act which, with or without notice, lapse of time or both, would constitute a
\ndefault under the provisions of, any contract described in the first sentence of
\nthis paragraph, except in each case for those violations and defaults which,
\nindividually or in the aggregate, would not reasonably be expected to result in
\na Material Adverse Effect on Adaptive. Schedule 3.2(m) of the Adaptive
\nDisclosure Schedule sets forth the contracts described in the first sentence of
\nthis paragraph that give rise to a right of the other parties thereto to
\nterminate such contract, to a right of first refusal or similar right thereunder
\nas a result of the execution and delivery of this Agreement and the consummation
\nby Adaptive of the Merger and the other transactions contemplated hereby, or
\nthat could, after the Effective Time, restrict Western or any <\/p>\n
26<\/p>\n
of its Affiliates or any successor thereto, from engaging or competing in any
\nline of business or in any geographic area.<\/p>\n
(n) Employee Benefits.
\n —————–<\/p>\n
(i) Schedule 3.2(n) of the Adaptive Disclosure Schedule contains a
\ntrue and complete list of each written, formal “employee benefit plan” (within
\nthe meaning of section 3(3) of the Employee Retirement Income Security Act of
\n1974, as amended (“ERISA”), including, without limitation, multiemployer plans
\nwithin the meaning of ERISA section 3(37)), stock purchase, stock option,
\nseverance, employment, change-in-control, fringe benefit, bonus, incentive,
\ndeferred compensation and all other employee benefit plans, agreements,
\nprograms, policies or other arrangements, whether or not subject to ERISA
\n(including any funding mechanism therefor now in effect or required in the
\nfuture as a result of the transaction contemplated by this Agreement or
\notherwise), whether legally binding or not, under which any employee or former
\nemployee of Adaptive or any of its Subsidiaries has any present or future right
\nto benefits and under which Adaptive or any of its Subsidiaries has any present
\nor future liability. All such plans, agreements, programs, policies and
\narrangements shall be collectively referred to as the “Adaptive Benefit Plans”.
\n ———————-
\nSchedule 3.2(n)(i) of the Adaptive Disclosure Schedule lists each employment
\nagreement in effect on the date of this Agreement.<\/p>\n
(ii) With respect to each Adaptive Benefit Plan, Adaptive has
\ndelivered or made available to Western a current, accurate and complete copy
\n(or, to the extent no such copy exists, an accurate description) thereof and, to
\nthe extent applicable: (A) any related trust agreement or other funding
\ninstrument; (B) the most recent determination letter, if applicable; (C) any
\ncurrent summary plan description and other written communications (or a
\ndescription of any oral communications) by Adaptive or any of its Subsidiaries
\nwithin the last year to their employees concerning the extent of the benefits
\nprovided under a Adaptive Benefit Plan; and (D) for the two most recent years
\nthe Form 5500 and attached schedules, audited financial statements, actuarial
\nvaluation reports and attorney’s response to an auditor’s request for
\ninformation.<\/p>\n
(iii) (A) Each Adaptive Benefit Plan has been established and
\nadministered in accordance with its terms, and in substantial compliance with
\nthe applicable provisions of ERISA, the Code and other applicable laws, rules
\nand regulations; (B) each Adaptive Benefit Plan which is intended to be
\nqualified within the meaning of Code section 401(a) is so qualified and has
\nreceived a favorable determination letter as to its qualification, and nothing
\nhas occurred, whether by action or failure to act, that could reasonably be
\nexpected to cause the loss of such qualification; (C) no event has occurred and
\nno condition exists that would subject Adaptive or any of its Subsidiaries,
\neither directly or by reason of their affiliation with any member of their
\n“Controlled Group” (defined as any organization which is a member of a
\n —————-
\ncontrolled group of organizations within the meaning of Code sections 414(b),
\n(c), (m) or (o)), to any material tax, fine, lien, penalty or other liability
\nimposed by ERISA, the Code or other applicable laws, rules and regulations;
\n(D) for each Adaptive Benefit Plan with respect to which a Form 5500 has been
\nfiled, no material change has occurred with respect to the matters covered by
\nthe most recent Form since the date thereof; (E) no “reportable event” (as such
\nterm is defined in ERISA section 4043), or “accumulated funding deficiency” (as
\nsuch term is defined in ERISA section 302 and Code section 412 (whether or not
\nwaived)) has occurred with respect <\/p>\n
27<\/p>\n
to any Adaptive Benefit Plan; (F) neither Adaptive nor any of its Subsidiaries
\nhas engaged in a transaction with respect to any Adaptive Benefit Plan that,
\nassuming the taxable period of such transaction expired as of the date hereof,
\ncould subject the Company or any subsidiary to a tax or penalty imposed by
\neither Section 4975 of the Code or Section 502(i) of ERISA in an amount which
\nwould be material; (G) no Adaptive Benefit Plan provides retiree welfare
\nbenefits and neither Adaptive nor any of its Subsidiaries have any obligation to
\nprovide any retiree welfare benefits other than as required by Section 4980B of
\nthe Code; and (H) neither Adaptive nor any member of its Controlled Group has
\nengaged in, or is a successor or parent corporation to an entity that has
\nengaged in, a transaction described in Sections 4069 or 4212(c) of ERISA.<\/p>\n
(iv) No Adaptive Benefit Plan is subject to Title IV of ERISA.<\/p>\n
(v) With respect to any Adaptive Benefit Plan, (A) no actions, suits
\nor claims (other than routine claims for benefits in the ordinary course) are
\npending or, to the knowledge of Adaptive, threatened and (B) no facts or
\ncircumstances exist to the knowledge of Adaptive that could reasonably be
\nexpected to give rise to any such actions, suits or claims.<\/p>\n
(vi) Except as set forth on Schedule 3.2(n), no Adaptive Benefit Plan
\nexists that could result in the payment to any present or former employee of
\nAdaptive or any of its Subsidiaries of any money or other property or accelerate
\nor provide any other rights or benefits to any present or former employee of
\nAdaptive or any of its Subsidiaries as a result of the transaction contemplated
\nby this Agreement. Except as set forth on Schedule 3.2(n), there is no contract,
\nplan or arrangement (written or otherwise) covering any employee or former
\nemployee of Adaptive or any of its Subsidiaries that, individually or
\ncollectively, could give rise to the payment of any amount that would not be
\ndeductible pursuant to the terms of Section 280G of the Code.<\/p>\n
(o) Insurance. All primary, excess and umbrella policies, bonds and
\n ———
\nother forms of insurance currently owned or held by or on behalf of and\/or
\nproviding insurance coverage to Adaptive and its Subsidiaries and their
\nrespective directors, officers, agents and employees are in full force and
\neffect, except for any such forms of insurance the absence of which would not
\nlikely have a Material Adverse Effect on Adaptive. Adaptive has not received a
\nnotice of default under any such policy and has not received written notice of
\nany pending or threatened termination or cancellation, coverage limitation or
\nreduction, or material premium increase with respect to any such policy. No
\nletters of credit have been posted and no cash has been restricted to support
\nany reserves for insurance.<\/p>\n
(p) Customers and Suppliers. Except as set forth in Part II of
\n ———————–
\nSection 3.2(p) of the Adaptive Disclosure Schedule, Adaptive reasonably believes
\nthat its relationships with its suppliers and customers are satisfactory. Except
\nas set forth in Part II of Section 3.2(p) of the Adaptive Disclosure Schedule,
\nas of the date of this Agreement, Adaptive believes, based on its inquiry of the
\nAdaptive Named Executives (defined below), that the estimates contained in Part
\nI of Schedule 3.2(p) for the customers named therein (the “Adaptive Named
\n ————–
\nCustomers”) are reasonable under the circumstances. Except as set forth in Part
\n———
\nII of Section 3.2(p) of the Adaptive Disclosure Schedule, as of the date of this
\nAgreement, nothing has come to the attention of the Adaptive Named Executives,
\nincluding any written or email correspondence from customers or from other
\nemployees of Adaptive, that, taken in the aggregate together with<\/p>\n
28<\/p>\n
all other available information relating to such Adaptive Named Customers,
\ncauses such Adaptive Named Executives to believe that Part I of Schedule 3.2(p)
\nis unreasonable. For purposes of this paragraph 3.2(p), “Adaptive Named
\n ————–
\nExecutives” means Fred Lawrence, Daniel Scharre, Donna Birks and Ken Wees. As of
\n———-
\nthe date of this Agreement, none of the Adaptive Named Customers has terminated
\nor canceled its agreement with Adaptive.<\/p>\n
(q) Properties. Except for properties and assets disposed of in the
\n ———-
\nordinary course of business consistent with past practices since June 30, 2000,
\nAdaptive and its Significant Subsidiaries have good and marketable title, free
\nand clear of all liabilities and liens, to all their material properties and
\nassets, whether tangible or intangible, real, personal or mixed. All material
\nbuildings, fixtures, equipment and other property and assets held under leases
\nby Adaptive or any of its Significant Subsidiaries are held under valid
\ninstruments enforceable by Adaptive or such Significant Subsidiary in accordance
\nwith their respective terms. Substantially all of Adaptive’s and its Significant
\nSubsidiaries’ equipment in regular use has been well maintained and is in good
\nand serviceable condition, reasonable wear and tear excepted.<\/p>\n
(r) Environmental Matters. Except as would not reasonably be
\n ———————
\nexpected, individually or in the aggregate, to have a Material Adverse Effect:<\/p>\n
(i) Adaptive and its Subsidiaries hold, and are in compliance with
\nand have been in continuous compliance with all Environmental Permits, and are,
\nand have been, otherwise in compliance with all Environmental Laws;<\/p>\n
(ii) None of Adaptive and its Subsidiaries has received any
\nEnvironmental Claim, and none of Adaptive and its Subsidiaries is aware of any
\nthreatened Environmental Claim;<\/p>\n
(iii) None of Adaptive and its Subsidiaries has entered into, has
\nagreed to, or is subject to any judgment, decree, order or other similar
\nrequirement of any governmental authority under any Environmental Laws;<\/p>\n
(iv) To the knowledge of Adaptive, Hazardous Materials have not been
\ngenerated, transported, treated, stored, disposed of, arranged to be disposed
\nof, released or threatened to be released at, on, from or under any of the
\nproperties or facilities currently or formerly owned, leased or otherwise used
\nby Adaptive or its Subsidiaries, in violation of, or in a manner or to a
\nlocation that would reasonably be expected to give rise to liability to Adaptive
\nor any of its Subsidiaries under any Environmental Laws; and<\/p>\n
(v) None of Adaptive and its Subsidiaries has assumed, contractually
\nor by operation of law, any liabilities or obligations under any Environmental
\nLaws.<\/p>\n
(s) Certain Divestitures. Since January 1, 1998, Adaptive has sold
\n ——————–
\nall of the businesses and other assets listed on Schedule 3.2(q) of the Adaptive
\nDisclosure Schedule (the “Divested Businesses”). Set forth on Section 3.2(q) of
\n ——————-
\nthe Adaptive Disclosure Schedule is a list of all material agreements,
\narrangements and understandings to which Adaptive or any of its Subsidiaries is
\na party or pursuant to which they may have any obligations or liabilities
\n(whether absolute, contingent or otherwise and whether or not required to be set
\nforth or reflected in a consolidated balance sheet of Adaptive prepared in
\naccordance with GAAP) relating to the<\/p>\n
29<\/p>\n
Divested Businesses or the sale thereof other than obligations or liabilities
\nagainst which Adaptive is indemnified by the acquiror thereof (the “Divestiture
\n ———–
\nAgreements”). Adaptive has provided to Western true and correct copies of the
\n———-
\nDivestiture Agreements. All of the Divestiture Agreements are in full force and
\neffect and are unmodified. Except for obligations and liabilities arising under
\nthe Divestiture Agreements, neither Adaptive nor any of its Subsidiaries has any
\nmaterial liabilities or obligations of any nature (whether absolute, contingent
\nor otherwise and whether or not required to be set forth or reflected in a
\nconsolidated balance sheet of Adaptive prepared in accordance with GAAP) arising
\nout of or relating to the Divested Businesses or their respective businesses,
\nassets, liabilities or obligations or the sale thereof other than obligations or
\nliabilities against which Adaptive is indemnified by the acquiror thereof.
\nExcept as set forth on Schedule 3.2(q) of the Adaptive Disclosure Schedule, no
\nmaterial claims have been asserted or threatened against Adaptive or any of its
\nSubsidiaries under any of the Divestiture Agreements (including, without
\nlimitation, any claims in respect of a breach of any term of any such agreement
\nor for any indemnification provided by Adaptive or any of its Subsidiaries in
\nany Divestiture Agreement) nor to the knowledge of Adaptive is there any basis
\nfor any such claim.<\/p>\n
(t) Adaptive Rights Agreement. The Adaptive Board has amended
\n ————————-
\n(substantially in the form provided to Western) the Adaptive Rights Agreement to
\nthe effect that none of Western, Merger Sub, WMC Holding or any of their
\nrespective affiliates shall become an “Acquiring Person”, and that no
\n“Distribution Date” or “Triggering Event” (as such terms are defined in the
\nAdaptive Rights Agreement) will occur as a result of the approval, execution or
\ndelivery of this Agreement, the Adaptive Stock Option Agreement or the Voting
\nAgreement of WMC Holding or the consummation of the transactions contemplated
\nhereby or thereby. The Adaptive Rights Agreement shall terminate and be of no
\nfurther immediately prior to the Effective Time, without any consideration being
\npayable with respect to the outstanding Adaptive Rights thereunder.<\/p>\n
(u) Brokers or Finders. No agent, broker, investment banker,
\n ——————
\nfinancial advisor or other firm or Person is or will be entitled to any broker’s
\nor finder’s fee or any other similar commission or fee in connection with any of
\nthe transactions contemplated by this Agreement, based upon arrangements made by
\nor on behalf of Adaptive, except Dain Rauscher Wessels, whose fees and expenses
\nwill be paid by Adaptive.<\/p>\n
ARTICLE IV
\n COVENANTS RELATING TO CONDUCT OF BUSINESS<\/p>\n
4.1 Covenants of Western.
\n ——————–<\/p>\n
During the period from the date of this Agreement and continuing until
\nthe Effective Time, Western agrees as to itself and its Subsidiaries that
\n(except as expressly contemplated or permitted by this Agreement or Section 4.1
\n(including its subsections) of the Western Disclosure Schedule or to the extent
\nthat Adaptive shall otherwise consent in writing):<\/p>\n
(a) Ordinary Course.
\n —————<\/p>\n
30<\/p>\n
Western and its Subsidiaries shall carry on their respective businesses
\nin the usual, regular and ordinary course in all material respects, in
\nsubstantially the same manner as heretofore conducted, and shall use its
\nreasonable best efforts to preserve intact their present lines of business,
\nmaintain their rights and franchises and preserve their relationships with
\ncustomers, suppliers and others having business dealings with them and retain
\nthe services of their respective officers, key employees and consultants to the
\nend that their ongoing businesses shall not be impaired in any material respect
\nat the Effective Time.<\/p>\n
(b) Dividends; Changes of Share Capital.
\n ———————————–<\/p>\n
Western shall not, and shall not permit any of its Subsidiaries to, and
\nshall not propose to, (i) declare or pay any dividends on or make other
\ndistributions in respect of any of its outstanding shares of capital stock; (ii)
\nsplit, combine or reclassify any of its capital stock or issue or authorize or
\npropose the issuance of any other securities in respect of, in lieu of or in
\nsubstitution for, shares of its capital stock; or (iii) repurchase, redeem or
\notherwise acquire any shares of its capital stock or any securities convertible
\ninto or exercisable for any shares of its capital stock.<\/p>\n
(c) Issuance of Securities.
\n ———————-<\/p>\n
Western shall not, and shall not permit any of its Subsidiaries to,
\nissue, deliver or sell, or authorize or propose the issuance, delivery or sale
\nof any shares of its capital stock of any class or any securities convertible
\ninto or exercisable for, or any rights, warrants, calls or options to acquire,
\nany such shares, or enter into any commitment, arrangement, undertaking or
\nagreement with respect to any of the foregoing, other than (i) the issuance of
\nWestern Common Stock upon the exercise of Western Stock Options in accordance
\nwith their present terms or pursuant to Western Stock Options or other stock
\nbased awards granted pursuant to clause (ii) below, (ii) the granting of up to
\n2,500,000 Western Stock Options or other stock based awards of or to acquire
\nshares of Western Common Stock granted under Western Stock Option Plans
\noutstanding on the date hereof in the ordinary course of business consistent
\nwith past practice, (iii) issuances by a wholly owned Subsidiary of Western of
\ncapital stock to such Subsidiary’s parent or another wholly owned Subsidiary of
\nWestern, (iv) pursuant to acquisitions and investments or the financings
\ntherefore, or (v) issuances disclosed in Section 4.1(c) of the Western
\nDisclosure Schedule.<\/p>\n
(d) Governing Documents.
\n ——————-<\/p>\n
Except to the extent required to comply with their respective
\nobligations under this Agreement or with applicable law, Western and Merger Sub
\nshall not amend or propose to so amend their respective certificates of
\nincorporation or bylaws.<\/p>\n
(e) No Acquisitions.
\n —————<\/p>\n
Western shall not acquire or agree to acquire by merger or
\nconsolidation, or by purchasing a substantial equity interest in or a
\nsubstantial portion of the assets of, or by any other manner, any business or
\nany corporation, partnership, association, joint venture or other business
\norganization or division thereof or otherwise acquire or agree to acquire any
\nassets (excluding the acquisition of assets used in the operations of the
\nbusiness of Western and its Subsidiaries in <\/p>\n
31<\/p>\n
the ordinary course, which assets do not constitute a business unit, division or
\nall or substantially all of the assets of the transferor) to the extent such
\nacquisition could reasonably be expected to materially delay or interfere with
\nthe consummation of the Merger; provided, however, that the foregoing shall not
\n ——– ——-
\nprohibit (x) internal reorganizations or consolidations involving existing
\nSubsidiaries of Western or (y) the creation of new Subsidiaries of Western
\norganized to conduct or continue activities otherwise permitted by this
\nAgreement. For the avoidance of doubt and as an example only, the parties agree
\nthat an acquisition would “materially delay” consummation of the Merger if pro
\nforma financial statements would be required to be included in the relevant
\ndisclosure document relating to such acquisition and complying with such a
\nrequirement would delay clearance of the Form S-4 (as defined below) by the SEC.
\nWestern shall give reasonable advance notice of any such acquisition to
\nAdaptive, provided that Adaptive shall have agreed in writing to keep such
\ninformation confidential.<\/p>\n
(f) No Dispositions.
\n —————<\/p>\n
Western shall not, and shall not permit any of its Subsidiaries to,
\nsell, lease or otherwise dispose of, or agree to sell, lease or otherwise
\ndispose of, any of its assets (including capital stock of Subsidiaries of
\nWestern) except in the ordinary course of business.<\/p>\n
(g) Investments; Indebtedness.
\n ————————-<\/p>\n
Western shall not, and shall not permit any of its Subsidiaries to,
\nother than as disclosed in Section 4.1(g) of the Western Disclosure Schedule,
\nmake any loans, advances or capital contributions to, or investments in, any
\nPerson, incur any indebtedness for borrowed money or guarantee any such
\nindebtedness of another Person, issue or sell any debt securities or warrants or
\nother rights to acquire any debt securities of Western or any of its
\nSubsidiaries, guarantee any debt securities of another person, enter into any
\n“keep well” or other agreement to maintain any financial statement condition of
\nanother Person (other than any wholly owned Subsidiary) or enter into any
\narrangement having the economic effect of any of the foregoing (collectively,
\n“Western Indebtedness”), except in the ordinary course of business consistent
\n ——————–
\nwith past practice and in any event not in excess of $1,000,000.<\/p>\n
(h) Tax-Free Qualification.
\n ———————-<\/p>\n
Western shall use its reasonable best efforts not to, and shall use its
\nreasonable best efforts not to permit any of its Subsidiaries to, take any
\naction (including any action otherwise permitted by this Section 4.1) that would
\nprevent or impede the Merger from qualifying as a reorganization under Section
\n368(a) of the Code.<\/p>\n
(i) Compensation.
\n ————<\/p>\n
Except as required by law or by the terms of any collective bargaining
\nagreement or other agreement currently in effect between Western or any
\nSubsidiary of Western and any officer or employee thereof, Western shall not
\nenter into or amend any employment, or severance or similar arrangement with any
\nofficer (with a title of vice president or above) whose salary and bonus is
\ngreater than $100,000 or increase the salary of any director, officer or
\nemployee of Western or any material Subsidiary of Western (except that Western
\nmay make reasonable salary increases in connection with Western customary
\nemployee review processes and market <\/p>\n
32<\/p>\n
adjustments), or make any increase in or commitment to increase any employee
\nbenefits or bonuses (except that Western may pay reasonable bonuses in
\naccordance with the bonus plans listed in Section 3.1(i) of the Western
\nDisclosure Schedule), other than pursuant to the terms of Western Stock Option
\nPlans, accelerate the exercisability of any Western Stock Options, make any
\nseverance payments (except for payments to employees terminated without cause
\nconsistent with past practice), adopt or amend or make any commitment to adopt
\nor amend any Western Benefit Plan or any plan, program or arrangement that would
\nbe a Western Benefit Plan if in effect as of the date hereof or make any
\ncontribution, other than regularly scheduled contributions, to any Western
\nBenefit Plan (except for nonmaterial changes to be implemented in connection
\nwith the Western open enrollment period).<\/p>\n
(j) Accounting Methods; Income Tax Elections.
\n —————————————-<\/p>\n
Except as disclosed in the Western SEC Reports filed prior to the date
\nof this Agreement, or as required by a Governmental Entity, Western shall not
\nchange its methods of accounting in effect at December 31, 1999, except as
\nrequired by changes in GAAP as concurred in by Western’s independent public
\naccountants. Western shall not (i) change its fiscal year, (ii) make or change
\nany Tax Election, (iii) change any annual Tax accounting period, (iv) change any
\nmethod of Tax accounting, (v) file any amended Tax Return, (vi) enter into any
\nclosing agreement relating to any Tax, (vii) settle any Tax claim or assessment,
\nor (viii) surrender any right to claim a Tax Refund, that, individually or in
\nthe aggregate, in the United States or elsewhere, would be material to Western.<\/p>\n
(k) No Related Actions.
\n ——————<\/p>\n
Western will not, and will not permit any of its Subsidiaries to, agree
\nor commit to do any of the foregoing.<\/p>\n
4.2 Covenants of Adaptive.
\n ———————<\/p>\n
During the period from the date of this Agreement and continuing until
\nthe Effective Time, Adaptive agrees as to itself and its Subsidiaries that
\n(except as expressly contemplated or permitted by this Agreement or Section 4.2
\n(including its subsections) of the Adaptive Disclosure Schedule or to the extent
\nthat Western shall otherwise consent in writing):<\/p>\n
(a) Ordinary Course.
\n —————<\/p>\n
(i) Adaptive and its Subsidiaries shall carry on their respective
\nbusinesses in the usual, regular and ordinary course in all material respects,
\nin substantially the same manner as heretofore conducted, and shall use its
\nreasonable best efforts to preserve intact their present lines of business,
\nmaintain their rights and franchises and preserve their relationships with
\ncustomers, suppliers and others having business dealings with them and retain
\nthe services of their respective officers and key employees and consultants, to
\nthe end that their ongoing businesses shall not be impaired in any material
\nrespect at the Effective Time.<\/p>\n
(ii) Other than in connection with acquisitions permitted by Section
\n4.2(e) or investments permitted by Section 4.2(g), Adaptive shall not, and shall
\nnot permit any of its Subsidiaries to, (A) enter into any new material line of
\nbusiness or (B) incur or commit to any<\/p>\n
33<\/p>\n
capital expenditures or any obligations or liabilities other than capital
\nexpenditures and obligations or liabilities in non-material amounts incurred or
\ncommitted to in the ordinary course of business consistent with past practice.<\/p>\n
(b) Dividends; Changes in Share Capital.
\n ———————————–<\/p>\n
Adaptive shall not, and shall not permit any of its Subsidiaries to,
\nand shall not propose to, (i) declare or pay any dividends on or make other
\ndistributions in respect of any of its capital stock; (ii) split, combine or
\nreclassify any of its capital stock or issue or authorize or propose the
\nissuance of any other securities in respect of, in lieu of or in substitution
\nfor, shares of its capital stock, except for any such transaction by a wholly
\nowned Subsidiary of Adaptive which remains a wholly owned Subsidiary after
\nconsummation of such transaction, or (iii) repurchase, redeem or otherwise
\nacquire any shares of its capital stock or any securities convertible into or
\nexercisable for any shares of its capital stock except for the purchase from
\ntime to time by Adaptive of Adaptive Common Stock in connection with the
\nAdaptive Benefit Plans in the ordinary course of business consistent with past
\npractice.<\/p>\n
(c) Issuance of Securities.
\n ———————-<\/p>\n
Adaptive shall not, and shall not permit any of its Subsidiaries to,
\nissue, deliver or sell, or authorize or propose the issuance, delivery or sale
\nof, any shares of its capital stock of any class, any Adaptive Voting Debt or
\nany securities convertible into or exercisable for, or any rights, warrants,
\ncalls or options to acquire, any such shares or Adaptive Voting Debt, or enter
\ninto any commitment, arrangement, undertaking or agreement with respect to any
\nof the foregoing, other than (i) the issuance of Adaptive Common Stock upon the
\nexercise of Adaptive Stock Options in accordance with their present terms or
\npursuant to Adaptive Stock Options or other stock-based awards granted pursuant
\nto clause (ii) below, (ii) the granting of up to 1,000,000 Adaptive Stock
\nOptions or other stock based awards of or to acquire shares of Adaptive Common
\nStock granted under Adaptive Stock Option Plans outstanding on the date hereof
\nin the ordinary course of business consistent with past practice, (iii)
\nissuances by a wholly owned Subsidiary of Adaptive of capital stock to such
\nSubsidiary’s parent or another wholly owned Subsidiary of Adaptive, or (iv)
\nissuances disclosed in Section 4.2(c) of the Adaptive Disclosure Schedule.<\/p>\n
(d) Governing Documents.
\n ——————-<\/p>\n
Except as set forth in Section 4.2(d) of the Adaptive Disclosure
\nSchedule or to the extent required to comply with their respective obligations
\nhereunder or with applicable law, Adaptive and its Subsidiaries shall not amend
\nor propose to amend their respective certificates of incorporation or bylaws.<\/p>\n
(e) No Acquisitions.
\n —————<\/p>\n
Adaptive shall not, and shall not permit any of its Subsidiaries to,
\nacquire or agree to acquire by merger or consolidation, or by purchasing an
\nequity interest in or the assets of, or by any other manner, any business or any
\ncorporation, partnership, joint venture, association or other business
\norganization or division thereof or otherwise acquire or agree to acquire any
\nassets (excluding the acquisition of assets used in the operations of the
\nbusiness of Adaptive and its <\/p>\n
34<\/p>\n
Subsidiaries in the ordinary course, which assets do not constitute a business
\nunit, division or all or substantially all of the assets of the transferor).
\nWithout limiting the foregoing, Adaptive shall not, and shall not permit any of
\nits Subsidiaries to, engage in (x) internal reorganizations or consolidations
\ninvolving existing Subsidiaries of Adaptive or (y) the creation of new
\nSubsidiaries of Adaptive organized to conduct or continue activities otherwise
\npermitted by this Agreement.<\/p>\n
(f) No Dispositions.
\n —————<\/p>\n
Adaptive shall not, and shall not permit any of its Subsidiaries to,
\nsell, lease or otherwise dispose of, or agree to sell, lease or otherwise
\ndispose of, any of its assets (including capital stock of Subsidiaries of
\nAdaptive) except in the ordinary course of business.<\/p>\n
(g) Investments; Indebtedness.
\n ————————-<\/p>\n
Adaptive shall not, and shall not permit any of its Subsidiaries to,
\nother than as disclosed in Section 4.2(g) of the Adaptive Disclosure Schedule,
\nmake any loans, advances or capital contributions to, or investments in, any
\nPerson, incur any indebtedness for borrowed money or guarantee any such
\nindebtedness of another Person, issue or sell any debt securities or warrants or
\nother rights to acquire any debt securities of Adaptive or any of its
\nSubsidiaries, guarantee any debt securities of another person, enter into any
\n“keep well” or other agreement to maintain any financial statement condition of
\nanother Person (other than any wholly owned Subsidiary) or enter into any
\narrangement having the economic effect of any of the foregoing (collectively,
\n“Adaptive Indebtedness”), except in the ordinary course of business consistent
\n ———————
\nwith past practice and in any event not in excess of $1,000,000.<\/p>\n
(h) Tax-Free Qualification.
\n ———————-<\/p>\n
Adaptive shall use its reasonable best efforts not to, and shall use
\nits reasonable best efforts not to permit any of its Subsidiaries to, take any
\naction (including any action otherwise permitted by this Section 4.2) that would
\nprevent or impede the Merger from qualifying as a reorganization under Section
\n368(a) of the Code.<\/p>\n
(i) Compensation.
\n ————<\/p>\n
Except as required by law or by the terms of any collective bargaining
\nagreement or other agreement currently in effect between Adaptive or any
\nSubsidiary of Adaptive and any officer or employee thereof, Adaptive shall not
\nenter into or amend any employment, or severance or similar arrangement with any
\nofficer (with a title of vice president or above) whose salary and bonus is
\ngreater than $100,000 or increase the salary of any director, officer or
\nemployee of Adaptive or any material Subsidiary of Adaptive (except that
\nAdaptive may make reasonable salary increases in connection with Adaptive
\ncustomary employee review processes, the planned focal review in February 2001
\nand market adjustments), or make any increase in or commitment to increase any
\nemployee benefits or bonuses (except that Adaptive may pay reasonable bonuses in
\naccordance with the bonus plans listed in Section 3.2(n) of the Adaptive
\nDisclosure Schedule), other than pursuant to the terms of the Adaptive Stock
\nOption Plans, accelerate the exercisability of any Adaptive Stock Options, make
\nany severance payments (except for payments to employees terminated without
\ncause consistent with past practice), adopt or amend or make any commitment to
\nadopt or amend any Adaptive Benefit Plan or any plan, <\/p>\n
35<\/p>\n
program or arrangement that would be a Adaptive Benefit Plan if in effect as of
\nthe date hereof or make any contribution, other than regularly scheduled
\ncontributions, to any Adaptive Benefit Plan (except for nonmaterial changes to
\nbe implemented in connection with the Adaptive open enrollment period).<\/p>\n
(j) Accounting Methods; Income Tax Elections.
\n —————————————-<\/p>\n
Except as disclosed in the Adaptive SEC Reports filed prior to the date
\nof this Agreement, or as required by a Governmental Entity, Adaptive shall not
\nchange its methods of accounting in effect at December 31, 1999, except as
\nrequired by changes in GAAP as concurred in by Adaptive’s independent public
\naccountants. Adaptive shall not (i) change its fiscal year, (ii) make or change
\nany Tax Election, (iii) change any annual Tax accounting period, (iv) change any
\nmethod of Tax accounting, (v) file any amended Tax Return, (vi) enter into any
\nclosing agreement relating to any Tax, (vii) settle any Tax claim or assessment,
\nor (viii) surrender any right to claim a Tax Refund, that, individually or in
\nthe aggregate, in the United States or elsewhere, would be material to Adaptive
\nor the Surviving Corporation.<\/p>\n
(k) Material Contracts and Arrangements.
\n ———————————–<\/p>\n
Adaptive shall not, and shall not permit any of its Subsidiaries to,
\n(i) other than customer contracts entered into, renewed or amended in the
\nordinary course of business with existing customers or contracts entered into,
\nrenewed, amended or terminated with the express approval of Daniel Scharre after
\nconsultation with Western in accordance with Section 5.13, enter into, renew,
\namend any material term of or terminate any contract or agreement that calls for
\naggregate payments of $100,000 or more and which is not either (x) terminable at
\nwill on 60 days or less notice without payment of a penalty or (y) of a term of
\nless than one year; or (ii) enter into or amend any agreements or arrangements
\nthat could, after the Effective Time, limit or restrict Western or any of its
\nAffiliates (including Western) or any successor thereto, from engaging or
\ncompeting in any line of business or in any geographic area.<\/p>\n
(l) Settlements.
\n ———–<\/p>\n
Adaptive shall not, and shall not permit any of its Subsidiaries to,
\nsettle or compromise any material claim, action, suit, litigation, proceeding,
\narbitration, investigation, audit, controversy or similar dispute or proceeding.<\/p>\n
(m) Intellectual Property.
\n ———————<\/p>\n
Adaptive shall not amend, modify or terminate any existing Adaptive IP
\nLicense, execute any new Adaptive IP License, sell, license or otherwise dispose
\nof, in whole or in part, any Adaptive IP, and\/or subject any Adaptive IP to any
\nLien, other than pursuant to contracts or agreements entered into in the
\nordinary course of business consistent with past practice.<\/p>\n
(n) No Related Actions.
\n ——————<\/p>\n
Adaptive will not, and will not permit any of its Subsidiaries to,
\nagree or commit to do any of the foregoing.<\/p>\n
36<\/p>\n
4.3 Governmental Filings.
\n ——————–<\/p>\n
Each party shall (a) confer on a reasonable basis with the other and
\n(b) report to the other (to the extent permitted by law or regulation or any
\napplicable confidentiality agreement) on operational matters. Adaptive and
\nWestern shall file all reports required to be filed by each of them with the SEC
\n(and all other Governmental Entities) between the date of this Agreement and the
\nEffective Time and shall, if requested by the other party and to the extent
\npermitted by law or regulation or any applicable confidentiality agreement,
\ndeliver to the other party copies of all such reports, announcements and
\npublications promptly after such request.<\/p>\n
ARTICLE V
\n ADDITIONAL AGREEMENTS<\/p>\n
5.1 Preparation of Proxy Statement; Stockholders Meetings.
\n —————————————————–<\/p>\n
(a) As promptly as reasonably practicable following the date
\nhereof, Western and Adaptive shall cooperate in preparing and each shall cause
\nto be filed with the SEC mutually acceptable proxy materials which shall
\nconstitute the joint proxy statement\/prospectus relating to the matters to be
\nsubmitted to the Western stockholders at the Western Stockholders Meeting (as
\ndefined in Section 5.1(c)) and the matters to be submitted to the Adaptive
\nstockholders at the Adaptive Stockholders Meeting (defined in Section 5.1(b))
\n(such proxy statement\/prospectus, and any amendments or supplements thereto, the
\n“Joint Proxy Statement\/Prospectus”) and Western shall prepare and file with the
\n ——————————–
\nSEC a registration statement on Form S-4 with respect to the issuance of Western
\nCommon Stock in the Merger (such Form S-4, and any amendments or supplements
\nthereto, the “Form S-4”). Each of Western and Adaptive shall use its reasonable
\n ——–
\nefforts to cause Simpson Thacher & Bartlett and Cooley Godward LLP,
\nrespectively, to deliver to it a tax opinion satisfying the requirements of Item
\n601 of Regulation S-K promulgated under the Securities Act, which tax opinion
\nshall be included as an exhibit to the Form S-4. The Joint Proxy
\nStatement\/Prospectus will be included as a prospectus in and will constitute a
\npart of the Form S-4 as Western’s prospectus. Each of Western and Adaptive shall
\nuse reasonable best efforts to have the Joint Proxy Statement\/Prospectus cleared
\nby the SEC and the Form S-4 declared effective by the SEC and to keep the
\nForm S-4 effective as long as is necessary to consummate the Merger and the
\ntransactions contemplated hereby and thereby. Western and Adaptive shall, as
\npromptly as practicable after receipt thereof, provide the other party copies of
\nany written comments and advise the other party of any oral comments, with
\nrespect to the Joint Proxy Statement\/Prospectus or Form S-4 received from the
\nSEC. The parties shall cooperate and provide the other with a reasonable
\nopportunity to review and comment on any amendment or supplement to the Joint
\nProxy Statement\/Prospectus and the Form S-4 prior to filing such with the SEC,
\nand will provide each other with a copy of all such filings made with the SEC.
\nNotwithstanding any other provision herein to the contrary, no amendment or
\nsupplement (including by incorporation by reference) to the Joint Proxy
\nStatement\/Prospectus or the Form S-4 shall be made without the approval of both
\nparties, which approval shall not be unreasonably withheld or delayed; provided
\n ——–
\nthat with respect to documents filed by a party that are incorporated by
\nreference in the Form S-4 or Joint Proxy Statement\/Prospectus, this right of
\napproval shall apply only with respect to information relating to the other
\nparty or its business, financial condition or results of operations. Western
\nwill use reasonable best efforts to cause the Joint Proxy Statement\/Prospectus
\nto be mailed to Western stockholders, and Adaptive will use reasonable best
\nefforts to cause the <\/p>\n
37<\/p>\n
Joint Proxy Statement\/Prospectus to be mailed to Adaptive’s stockholders, in
\neach case as promptly as practicable after the Form S-4 is declared effective
\nunder the Securities Act. Western shall also take any action (other than
\nqualifying to do business in any jurisdiction in which it is not now so
\nqualified or to file a general consent to service of process) required to be
\ntaken under any applicable state securities laws in connection with the Merger
\nand each of Adaptive and Western shall furnish all information concerning it and
\nthe holders of its capital stock as may be reasonably requested in connection
\nwith any such action. Each party will advise the other party, promptly after it
\nreceives notice thereof, of the time when the Form S-4 has become effective, the
\nissuance of any stop order, the suspension of the qualification of the Western
\nCommon Stock issuable in connection with the Merger for offering or sale in any
\njurisdiction, or any request by the SEC for amendment of the Joint Proxy
\nStatement\/Prospectus or the Form S-4. If at any time prior to the Effective Time
\nany information relating to Western or Adaptive, or any of their respective
\naffiliates, officers or directors, should be discovered by Western or Adaptive,
\nwhich information should be set forth in an amendment or supplement to either
\nthe Form S-4 or the Joint Proxy Statement\/Prospectus so that any of such
\ndocuments would not include any misstatement of a material fact or omit to state
\nany material fact necessary to make the statements therein, in light of the
\ncircumstances under which they were made, not misleading, the party that
\ndiscovers such information shall promptly notify the other party hereto and, to
\nthe extent required by law, rules or regulations, an appropriate amendment or
\nsupplement describing such information shall be promptly filed with the SEC and
\ndisseminated to the stockholders of Western and Adaptive.<\/p>\n
(b) Adaptive shall duly take all lawful action to call, give notice
\nof, convene and hold a meeting of its stockholders on a date determined in
\naccordance with the mutual agreement of Adaptive and Western (the “Adaptive
\n ——–
\nStockholders Meeting”) for the purpose of obtaining the Adaptive Stockholder
\n——————–
\nApproval and shall take all lawful action to solicit the Adaptive Stockholder
\nVote; and the Board of Directors of Adaptive shall recommend adoption of this
\nAgreement and the transactions contemplated hereby by the stockholders of
\nAdaptive (the “Adaptive Recommendation”), and shall not, unless Western makes a
\n ———————–
\nchange in the Western Recommendation, (x) withdraw, modify or qualify (or
\npropose to withdraw, modify or qualify) in any manner adverse to Western such
\nrecommendation or (y) take any action or make any statement (other than any
\naction described in the foregoing clause (x)) in connection with the Adaptive
\nStockholders Meeting inconsistent with such recommendation (collectively, a
\n“Change in the Adaptive Recommendation”); provided, however, any action or
\n ————————————- ——– ——-
\nstatement under clause (y) will not be deemed a Change in the Adaptive
\nRecommendation provided (I) such action or statement is taken or made pursuant
\nto advice from Cooley Godward LLP, counsel to Adaptive, to the effect that such
\naction or statement is required by applicable law, (II) if a Adaptive Public
\nProposal has been made and not rescinded, such action or statement shall not
\nrelate to such Adaptive Public Proposal other than any factual statement
\nrequired by any regulatory authority (including the SEC) and shall in any event
\ninclude a rejection of such Adaptive Public Proposal and (III) such action or
\nstatement also includes a reaffirmation of the Adaptive Board of Directors
\napproval of the Merger and the other transactions contemplated hereby and
\nrecommendation to the Adaptive stockholders to adopt this Agreement; provided,
\n ——–
\nfurther, however, that the Board of Directors of Adaptive may make a Change in
\n——- ——-
\nthe Adaptive Recommendation pursuant to Section 5.4 hereof. Notwithstanding any
\nChange in the Adaptive Recommendation, this Agreement shall be submitted to the
\nstockholders of Adaptive at the <\/p>\n
38<\/p>\n
Adaptive Stockholders Meeting for the purpose of voting upon this Agreement and
\nnothing contained herein shall be deemed to relieve Adaptive of such obligation.<\/p>\n
(c) Western shall duly take all lawful action to call, give notice
\nof, convene and hold a meeting of its stockholders on a date determined in
\naccordance with the mutual agreement of Western and Adaptive (the “Western
\n ——-
\nStockholders Meeting”) for the purpose of obtaining the Western Stockholder
\n——————–
\nApproval with respect to the transactions contemplated by this Agreement and
\nshall take all lawful action to solicit the Western Stockholder Vote, and the
\nBoard of Directors of Western shall recommend approval of the issuance of
\nWestern Common Stock pursuant to this Agreement by the stockholders of Western
\n(the “Western Recommendation”), and shall not, unless Adaptive makes a Change in
\n ———————-
\nthe Adaptive Recommendation, (x) withdraw, modify or qualify (or propose to
\nwithdraw, modify or qualify) in any manner adverse to Adaptive such
\nrecommendation or (y) take any action or make any statement (other than any
\naction described in the foregoing clause (x)) in connection with the Western
\nStockholders Meeting inconsistent with such recommendation (collectively, a
\n“Change in the Western Recommendation”); provided, however, any action or
\n ———————————— ——– ——-
\nstatement under clause (y) will not be deemed a Change in the Western
\nRecommendation provided (I) such action or statement is taken or made pursuant
\nto advice from Simpson Thacher & Bartlett, counsel to Western, to the effect
\nthat such action or statement is required by applicable law, (II) if a Western
\nPublic Proposal has been made and not rescinded, such action or statement shall
\nnot relate to such Western Public Proposal other than any factual statement
\nrequired by any regulatory authority (including the SEC) and shall in any event
\ninclude a rejection of such Western Public Proposal and (III) such action or
\nstatement also includes a reaffirmation of the Western Board of Directors’
\napproval of the Merger and the other transactions contemplated hereby and
\nrecommendation to the Western stockholders to approve the issuance of Western
\nCommon Stock pursuant to this Agreement; provided, further, however, that the
\n ——– ——- ——-
\nBoard of Directors of Western may make a Change in the Western Recommendation
\npursuant to Section 5.4 hereof. Notwithstanding any Change in the Western
\nRecommendation, this Agreement shall be submitted to the stockholders of Western
\nat the Western Stockholders Meeting for the purpose of approving the issuance of
\nWestern Common Stock pursuant to this Agreement and nothing contained herein
\nshall be deemed to relieve Western of such obligation.<\/p>\n
5.2 Access to Information.
\n ———————<\/p>\n
Upon reasonable notice, each party shall (and shall cause its
\nSubsidiaries to) afford to the officers, employees, accountants, counsel,
\nfinancial advisors and other representatives of the other party reasonable
\naccess during normal business hours, during the period prior to the Effective
\nTime, to all its properties, books, contracts, commitments, records, officers
\nand employees and, during such period, such party shall (and shall cause its
\nSubsidiaries to) furnish promptly to the other party (a) a copy of each report,
\nschedule, registration statement and other document filed, published, announced
\nor received by it during such period pursuant to the requirements of Federal or
\nstate securities laws and the HSR Act and (b) all other information concerning
\nit and its business, properties and personnel as such other party may reasonably
\nrequest. The parties will hold any such information obtained pursuant to this
\nSection 5.2 in confidence in accordance with, and shall otherwise be subject to,
\nthe provisions of the confidentiality letter dated September 6, 2000, between
\nAdaptive and Western (the “Confidentiality Agreement”), which Confidentiality
\n ————————-
\nAgreement shall continue in full force and<\/p>\n
39<\/p>\n
effect. Any investigation by either of Western or Adaptive shall not affect the
\nrepresentations and warranties of the other.<\/p>\n
5.3 Reasonable Best Efforts.
\n ———————–<\/p>\n
(a) Subject to the terms and conditions of this Agreement, each party
\nwill use its reasonable best efforts to take, or cause to be taken, all actions
\nand to do, or cause to be done, all things necessary, proper or advisable under
\nthis Agreement and applicable laws and regulations to consummate the Merger and
\nthe other transactions contemplated by this Agreement as soon as practicable
\nafter the date hereof, including (i) preparing and filing as promptly as
\npracticable all documentation to effect all necessary applications, notices,
\npetitions, filings, tax ruling requests and other documents and to obtain as
\npromptly as practicable all Necessary Consents and all other consents, waivers,
\nlicenses, orders, registrations, approvals, permits, rulings, authorizations and
\nclearances necessary or advisable to be obtained from any third party and\/or any
\nGovernmental Entity in order to consummate the Merger or any of the other
\ntransactions contemplated by this Agreement (collectively, the “Required
\n ——–
\nApprovals”) and (ii) taking all reasonable steps as may be necessary to obtain
\n———
\nall such Necessary Consents and the Required Approvals. In furtherance and not
\nin limitation of the foregoing, each party hereto agrees to make, as promptly as
\npracticable, (i) an appropriate filing of a Notification and Report Form
\npursuant to the HSR Act with respect to the transactions contemplated hereby
\n(which filing shall be made in any event within 10 Business Days of the date
\nhereof), (ii) all appropriate and necessary filings with the European Commission
\nin accordance with applicable competition, merger control, antitrust, investment
\nor similar laws and any necessary filings under the Canadian Investment
\nRegulations within the time periods specified thereunder, and (iii) all other
\nnecessary filings with other Governmental Entities relating to the Merger, and,
\nin each case, to supply as promptly as practicable any additional information
\nand documentary material that may be requested pursuant to such laws or by such
\nauthorities and to use reasonable best efforts to cause the expiration or
\ntermination of the applicable waiting periods under the HSR Act and the receipt
\nof Required Approvals under such other laws or from such authorities as soon as
\npracticable. Notwithstanding the foregoing, nothing in this Section 5.3 or the
\nother provisions of this Agreement shall require, or be deemed to require, (x)
\nWestern or Adaptive or any of their respective Subsidiaries to agree to divest
\nor hold separate any material business or assets or to effect any such
\ndivestiture or action, (y) Western or Adaptive or any of their Subsidiaries to
\nagree to any material restrictions or conditions on the conduct of their or
\ntheir Subsidiaries’ businesses or (z) Western or Adaptive to take any other
\naction if doing so would, individually or in the aggregate, reasonably be
\nexpected to result in a Material Adverse Effect on Western after the Merger.<\/p>\n
(b) Each of Adaptive and Western shall, in connection with the efforts
\nreferenced in Section 5.3(a) to obtain all Required Approvals, use its
\nreasonable best efforts to (i) cooperate in all respects with each other in
\nconnection with any filing or submission and in connection with any
\ninvestigation or other inquiry, including any proceeding initiated by a private
\nparty; (ii) promptly inform the other party of any communication received by
\nsuch party from, or given by such party to, the Antitrust Division of the
\nDepartment of Justice (the “DOJ”), the Federal Trade Commission (the “FTC”) or
\n — —
\nany other Governmental Entity and of any material communication received or
\ngiven in connection with any proceeding by a private party, in each case
\nregarding any of the transactions contemplated hereby; and (iii) consult with
\neach <\/p>\n
40<\/p>\n
other in advance to the extent practicable of any meeting or conference with,
\nthe DOJ, the FTC or any such other Governmental Entity or, in connection with
\nany proceeding by a private party, with any other Person, and to the extent
\npermitted by the DOJ, the FTC or such other applicable Governmental Entity or
\nother Person, give the other party the opportunity to attend and participate in
\nsuch meetings and conferences.<\/p>\n
(c) In furtherance and not in limitation of the covenants of the
\nparties contained in Section 5.3(a) and (b), if any administrative or judicial
\naction or proceeding, including any proceeding by a private party, is instituted
\n(or threatened to be instituted) challenging any transaction contemplated by
\nthis Agreement as violative of any Regulatory Law (as defined below), or if any
\nstatute, rule, regulation, executive order, decree, injunction or administrative
\norder is enacted, entered, promulgated or enforced by a Governmental Entity
\nwhich would make the Merger or the other transactions contemplated hereby
\nillegal or would otherwise prohibit or materially impair or delay the
\nconsummation of the Merger or the other transactions contemplated hereby, each
\nof Adaptive and Western shall cooperate in all reasonable respects with each
\nother and, subject to Section 5.3(a), seek to contest and resist any such action
\nor proceeding and to have vacated, lifted, reversed or overturned any decree,
\njudgment, injunction or other order, whether temporary, preliminary or
\npermanent, that is in effect and that prohibits, prevents or restricts
\nconsummation of the Merger or the other transactions contemplated by this
\nAgreement and to have such statute, rule, regulation, executive order, decree,
\ninjunction or administrative order repealed, rescinded or made inapplicable so
\nas to permit consummation of the transactions contemplated by this Agreement.
\nNotwithstanding the foregoing or any other provision of this Agreement, nothing
\nin this Section 5.3 shall limit a party’s right to terminate this Agreement
\npursuant to Section 7.1(b) or 7.1(c) so long as such party has up to then
\ncomplied with its obligations under this Section 5.3. For purposes of this
\nAgreement, “Regulatory Law” means the Sherman Act, as amended, the Clayton Act,
\n ————–
\nas amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
\nother federal, state and foreign, if any, statutes, rules, regulations, orders,
\ndecrees, administrative and judicial doctrines and other laws that are designed
\nor intended to prohibit, restrict or regulate (i) mergers, acquisitions or other
\nbusiness combinations, (ii) foreign investment or (iii) actions having the
\npurpose or effect of monopolization or restraint of trade or lessening of
\ncompetition.<\/p>\n
(d) Each of Adaptive and Western and its respective Board of Directors
\nshall, if any state takeover statute or similar statute becomes applicable to
\nthis Agreement, the Merger or any other transactions contemplated hereby or
\nthereby, take all action reasonably necessary to ensure that the Merger and the
\nother transactions contemplated by this Agreement may be consummated as promptly
\nas practicable on the terms contemplated hereby and otherwise to minimize the
\neffect of such statute or regulation on this Agreement, the Merger and the other
\ntransactions contemplated hereby.<\/p>\n
5.4 Non-Solicitation.
\n —————-<\/p>\n
(a) Without limitation on any of such party’s other obligations under
\nthis Agreement (including under Article IV hereof), each of Western and Adaptive
\nagrees that neither it nor any of its Subsidiaries nor any of the officers and
\ndirectors of it or its Subsidiaries shall, and that it shall direct and use its
\nreasonable best efforts to cause its and its Subsidiaries’ employees, agents and
\nrepresentatives (including any investment banker, attorney or accountant<\/p>\n
41<\/p>\n
retained by it or any of its Subsidiaries) not to, directly or indirectly, (i)
\ninitiate, solicit, encourage or knowingly facilitate any inquiries or the making
\nof any proposal or offer with respect to, or a transaction to effect, a merger,
\nreorganization, share exchange, consolidation, business combination,
\nrecapitalization, liquidation, dissolution or similar transaction involving it
\nor any of its Significant Subsidiaries, or any purchase or sale of 10% or more
\nof the consolidated assets (including without limitation stock of its
\nSubsidiaries) of such party and its Subsidiaries, taken as a whole, or any
\npurchase or sale of, or tender or exchange offer for, the equity securities of
\nsuch party that, if consummated, would result in any Person (or the stockholders
\nof such Person) beneficially owning securities representing 20% or more of the
\ntotal voting power of such party (or of the surviving parent entity in such
\ntransaction) or any of its Significant Subsidiaries (any such proposal, offer or
\ntransaction (other than a proposal or offer made by the other party or an
\nAffiliate thereof) being hereinafter referred to as an “Acquisition Proposal”),
\n ——————–
\n(ii) have any discussion with or provide any confidential information or data to
\nany Person relating to an Acquisition Proposal, or engage in any negotiations
\nconcerning an Acquisition Proposal, or knowingly facilitate any effort or
\nattempt to make or implement an Acquisition Proposal, (iii) approve or
\nrecommend, or propose publicly to approve or recommend, any Acquisition Proposal
\nor (iv) approve or recommend, or propose publicly to approve or recommend, or
\nexecute or enter into, any letter of intent, agreement in principle, merger
\nagreement, acquisition agreement, option agreement or other similar agreement.<\/p>\n
(b) Notwithstanding anything in this Agreement to the contrary but
\nsubject to clause (c) below, (i) each of Western and Adaptive or its respective
\nBoard of Directors shall be permitted to, to the extent applicable, comply with
\nRule 14d-9 and Rule 14e-2 promulgated under the Exchange Act with regard to an
\nAcquisition Proposal, and (ii) each of Western and Adaptive or its respective
\nBoard of Directors shall be permitted to engage in the matters set forth in
\nclauses (a) (ii) to (iv) above (other than executing or entering into, any
\nletter of intent, agreement in principle, merger agreement, acquisition
\nagreement, option agreement or other similar agreement) and to make a Change in
\nthe Western Recommendation or a Change in the Adaptive Recommendation, as the
\ncase may be, in connection with an unsolicited bona fide written Acquisition
\nProposal by any third party, if and only to the extent that: (w) its
\nStockholders Meeting shall not have occurred, (x) its Board of Directors
\nconcludes in good faith that such Acquisition Proposal constitutes a Superior
\nProposal (as defined below), (y) its Board of Directors, after consultation with
\noutside counsel, determines in good faith that the failure to take such action
\nwould be inconsistent with its fiduciary duties under applicable law; and (z)
\nthe Board of Directors of the subject party shall have received from such Person
\na confidentiality agreement substantially in the form of the Confidentiality
\nAgreement; provided that if such confidentiality agreement contains provisions
\n ——–
\nthat are less restrictive than the comparable provision, or omits restrictive
\nprovisions, contained in the Confidentiality Agreement, then the Confidentiality
\nAgreement will be deemed to be amended to contain only such less restrictive
\nprovisions or to omit such restrictive provisions, as the case may be. “Superior
\n ——–
\nProposal” means with respect to Adaptive or Western, as the case may be, a bona
\n——–
\nfide written proposal made by a Person other than either such party which is (I)
\nfor a merger, reorganization, consolidation, share exchange, business
\ncombination, recapitalization or similar transaction involving such party as a
\nresult of which the other party thereto or its stockholders will own 40% or more
\nof the combined voting power of the entity surviving or resulting from such
\ntransaction (or the ultimate parent entity thereof) and (II) is on terms which
\nthe Board of Directors of such party in good faith concludes (following receipt
\nof the advice of its financial advisors and outside counsel), taking <\/p>\n
42<\/p>\n
into account, among other things, all legal, financial, regulatory and other
\naspects of the proposal and the Person making the proposal (x) would, if
\nconsummated, result in a transaction that is more favorable to the stockholders
\n(in their capacities as stockholders), from a financial point of view, than the
\ntransactions contemplated by this Agreement and (y) is reasonably capable of
\nbeing completed.<\/p>\n
(c) Each of Adaptive and Western agrees that it will (i) promptly (and
\nin any event not later than the day following receipt of any proposal or offer)
\nadvise the other orally and in writing of the status and terms (including the
\nidentity of the Person making the such inquiry or proposal and the nature and
\namount of consideration offered) of any such proposals or offers and the status
\nand terms of any such discussions or negotiations, (ii) continuously keep the
\nother party informed of developments relating to such inquiries, proposals or
\noffers received by, any such information requested from, or any such discussions
\nor negotiations sought to be initiated or continued with, any of its
\nrepresentatives and (iii) other than as contemplated by this Agreement, not sign
\nany agreement inconsistent with the consummation of the Merger prior to the time
\nthat this Agreement is terminated in accordance with its terms. Each of Western
\nand Adaptive agrees that it will, and will cause its officers, directors and
\nrepresentatives to, immediately cease and cause to be terminated any activities,
\ndiscussions or negotiations existing as of the date of this Agreement with any
\nparties conducted heretofore with respect to any Acquisition Proposal. Each of
\nWestern and Adaptive agrees that it will use reasonable best efforts to promptly
\ninform its directors, officers, key employees, agents and representatives of the
\nobligations undertaken in this Section 5.4. Nothing in this Section 5.4 shall
\npermit Western or Adaptive to terminate this Agreement (except as specifically
\nprovided in Article VII hereof) or affect any other obligation of Western or
\nAdaptive under this Agreement. Neither Western nor Adaptive shall submit to the
\nvote of its stockholders any Acquisition Proposal other than the Merger.<\/p>\n
43<\/p>\n
5.5 Fees and Expenses.
\n —————–<\/p>\n
Subject to Section 7.2, whether or not the Merger is consummated, all
\nExpenses (as defined below) incurred in connection with this Agreement and the
\ntransactions contemplated hereby shall be paid by the party incurring such
\nExpenses, except (a) if the Merger is consummated, the Surviving Corporation
\nshall pay, or cause to be paid, any and all property or transfer taxes imposed
\nin connection with the Merger and (b) Expenses incurred in connection with the
\nfiling, printing and mailing of the Joint Proxy Statement\/Prospectus and Form
\nS-4, which shall be shared equally by Western and Adaptive. As used in this
\nAgreement, “Expenses” includes all out-of-pocket expenses (including, without
\n ——–
\nlimitation, all fees and expenses of counsel, accountants, investment bankers,
\nexperts and consultants to a party hereto and its affiliates) incurred by a
\nparty or on its behalf in connection with or related to the authorization,
\npreparation, negotiation, execution and performance of this Agreement, the WMC
\nHolding Voting Agreement, the Stock Option Agreements and the transactions
\ncontemplated hereby and thereby, including the preparation, printing, filing and
\nmailing of the Joint Proxy Statement\/Prospectus and Form S-4 and the
\nsolicitation of stockholder approvals and all other matters related to the
\ntransactions contemplated hereby and thereby.<\/p>\n
5.6 Directors’ and Officers’ Indemnification and Insurance.
\n ——————————————————<\/p>\n
(a) The certificate of incorporation and bylaws of the Surviving
\nCorporation shall contain provisions no less favorable with respect to
\nexculpation and indemnification than are set forth in Article XII of the
\ncertificate of incorporation and Article VII of the bylaws of Adaptive, which
\nprovisions shall not be amended, repealed or otherwise modified for a period of
\nsix years from the Effective Time in any manner that would adversely affect the
\nrights thereunder of individuals who at the Effective Time were directors,
\nofficers or employees of Adaptive.<\/p>\n
(b) Western shall cause to be maintained in effect for six years from
\nthe Effective Time the current policies of the directors’ and officers’
\nliability insurance maintained by Adaptive (provided that Western may substitute
\ntherefore policies of at least the same coverage containing terms and conditions
\nwhich are not materially less advantageous) with respect to matters or events
\noccurring prior to the Effective Time to the extent available; provided,
\nhowever, that in no event shall Western be required to expend more than an
\namount per year equal to 200 percent of Adaptive’s current premiums to maintain
\nor procure insurance coverage pursuant hereto; and, provided, further that if
\nthe annual premiums of such insurance coverage exceed such amount, Western shall
\nbe obligated to obtain a policy with the greatest coverage available for a cost
\nnot exceeding such amount.<\/p>\n
(c) After the Effective Time, Western agrees that it will indemnify and
\nhold harmless each present and former director and officer of Adaptive,
\ndetermined as of the Effective Time (the “Indemnified Parties”), against any
\n ——————-
\ncosts or expenses (including reasonable attorneys’ fees), judgments, fines,
\nlosses, claims, damages or liabilities (collectively, “Costs”) incurred in
\n —–
\nconnection with any claim, action, suit, proceeding or investigation, whether
\ncivil, criminal, administrative or investigative, arising out of or pertaining
\nto matters relating to their duties or actions in their capacity as officers and
\ndirectors and existing or occurring at or prior to the Effective Time, whether
\nasserted or claimed prior to, at or after the Effective Time, to the fullest<\/p>\n
44<\/p>\n
extent permitted under applicable law (and Western shall also advance fees and
\nexpenses (including reasonable attorneys’ fees) as incurred to the fullest
\nextent permitted under applicable law provided the person to whom expenses are
\nadvanced provides a customary undertaking complying with applicable law to repay
\nsuch advances if it is ultimately determined that such person is not entitled to
\nindemnification).<\/p>\n
(d) Nothing in this Agreement is intended to, shall be construed to or
\nshall release, waive or impair any rights to directors’ and officers’ insurance
\nclaims under any policy that is or has been in existence with respect to
\nAdaptive or any of its officers, directors or employees, it being understood and
\nagreed that the indemnification provided for this Section 5.6 is not prior to or
\nin substitution for any such claims under such policies.<\/p>\n
5.7 Board of Directors and Officers.
\n ——————————-<\/p>\n
Prior to the Effective Time, Western shall take all actions necessary
\nto appoint Frederick Lawrence and Daniel Scharre to the Board of Directors of
\nWestern and to elect Daniel Scharre and Donna Birks as President and Chief
\nOperating Officer and Chief Financial Officer, respectively, of Western, in each
\ncase effective at the Effective Time.<\/p>\n
5.8 Public Announcements.
\n ——————–<\/p>\n
The initial press release pertaining to the transactions contemplated
\nby this Agreement shall be a joint press release and thereafter Western and
\nAdaptive shall consult with each other before issuing communications to
\nemployees regarding the transactions contemplated by this Agreement or any press
\nrelease or otherwise making any public statements with respect to this Agreement
\nor the Merger and shall not issue any such press release or make any such public
\nstatement prior to such consultation, except as may be required by law or any
\nlisting agreement with its securities exchange; provided that either party may
\npublicly file this Agreement promptly following the date hereof. Adaptive and
\nWestern shall each provide to the other a copy of each press release or other
\npublic statement relating to its business reasonably in advance of making such
\nrelease or statement.<\/p>\n
5.9 Accountant’s Letters.
\n ——————–<\/p>\n
Each of Adaptive and Western shall use its reasonable best efforts to
\ncause to be delivered to the other party a letter of its independent public
\naccountants, dated a date within two business days before the date on which the
\nS-4 shall become effective and addressed to the other, in form and substance
\nreasonably satisfactory to the other and customary in scope and substance for
\ncomfort letters delivered by independent public accountants in connection with
\nregistration statements similar to the S-4.<\/p>\n
5.10 Listing of Shares of Western Common Stock.
\n —————————————–<\/p>\n
Western shall use its reasonable best efforts to cause the shares of
\nWestern Common Stock to be issued in the Merger and the shares of Western Common
\nStock to be reserved for issuance upon exercise of the Adaptive Stock Options to
\nbe approved for listing on the NASDAQ, subject to official notice of issuance,
\nprior to the Closing Date.<\/p>\n
45<\/p>\n
5.11 Affiliates.
\n ———-<\/p>\n
Not less than 45 days prior to the date of the Adaptive Stockholders
\nMeeting, Adaptive shall deliver to Western a letter identifying all persons who,
\nin the judgment of Adaptive, may be deemed at the time this Agreement is
\nsubmitted for adoption by the stockholders of Adaptive, “affiliates” of Adaptive
\nfor purposes of Rule 145 under the Securities Act and applicable SEC rules and
\nregulations, and such list shall be updated as necessary to reflect changes from
\nthe date thereof. Adaptive shall use its reasonable best efforts to cause each
\nperson identified on such list to deliver to Western not less than 30 days prior
\nto the Effective Time a written agreement in form and substance reasonably
\nsatisfactory to Adaptive and Western.<\/p>\n
5.12 Benefits Maintenance.
\n ——————–<\/p>\n
Western shall maintain for a period of three (3) years after the
\nEffective Time, without interruption, employee compensation and benefit plans,
\nprograms and policies and fringe benefits (including post-employment welfare
\nbenefits) that will provide benefits to each employee of Adaptive who continues
\nemployment with Western or any of its Affiliates (including Adaptive) after the
\nEffective Time that are, in the aggregate, no less favorable than those provided
\npursuant to similar employee compensation and benefit plans, programs and
\npolicies, and fringe benefits, of Western as in effect on the Effective Time.
\nEmployees of Adaptive who continue employment with Western shall be given credit
\nfor all service with Adaptive (or service credited by Adaptive for similar
\nplans, programs or policies) under all employee compensation and benefit plans,
\nprograms and policies and fringe benefits of Western in which they become
\nparticipants for purposes of eligibility, vesting and benefit accrual (other
\nthan benefit accrual under tax qualified defined benefit plans which would
\nprovide a duplication of benefits to employees of Adaptive).<\/p>\n
5.13 Agreement to Consult on Certain Matters.
\n —————————————<\/p>\n
Between the date hereof and the Effective Time, Adaptive and Western
\nwill confer on a regular basis with one or more representatives of the other
\nparty to report on operational matters and any proposals to engage in new
\ncontracts and transactions. In addition, (i) Adaptive shall promptly notify
\nWestern of the occurrence any Material Adverse Effect on Adaptive or of any
\nchange or event that would have caused a representation and warranty made by
\nAdaptive pursuant to Section 3.2 of this Agreement to be untrue in any material
\nrespect if it were made as of such date, and (ii) Western shall promptly notify
\nAdaptive of the occurrence any Material Adverse Effect on Western or of any
\nchange or event that would have caused a representation and warranty made by
\nWestern pursuant to Section 3.1 of this Agreement to be untrue in any material
\nrespect if it were made as of such date.<\/p>\n
5.14 Adaptive Rights Agreement.
\n ————————-<\/p>\n
The Adaptive Board shall take all action (in addition to that referred
\nto in Section 3.2(s)) necessary or desirable (including redeeming the Adaptive
\nRights immediately prior to the Effective Time or amending the Adaptive Rights
\nAgreement) in order to render the Adaptive Rights inapplicable to the Merger and
\nthe other transactions contemplated by this Agreement and <\/p>\n
46<\/p>\n
the Stock Option Agreements. Except in connection with the foregoing sentence,
\nthe Board of Directors of Adaptive shall not, without the prior written consent
\nof Western, (i) amend the Adaptive Rights Agreement or (ii) take any action with
\nrespect to, or make any determination under, the Adaptive Rights Agreement, in
\neach case in order to facilitate any Acquisition Proposal with respect to
\nAdaptive.<\/p>\n
ARTICLE VI
\n CONDITIONS PRECEDENT<\/p>\n
6.1 Conditions to Each Party’s Obligation to Effect Merger.
\n ——————————————————<\/p>\n
The respective obligations of Adaptive and Western to effect the Merger
\nand the transactions contemplated hereby are subject to the satisfaction or
\nwaiver on or prior to the Closing Date of the following conditions:<\/p>\n
(a) Stockholder Approval. (i) Adaptive shall have obtained the Adaptive
\n ——————–
\nStockholder Approval and (ii) Western shall have obtained the Western
\nStockholder Approval.<\/p>\n
(b) No Injunctions or Restraints; Illegality. No laws shall have been
\n —————————————-
\nadopted or promulgated, and no temporary restraining order, preliminary or
\npermanent injunction or other order issued by a court or other Governmental
\nEntity of competent jurisdiction shall be in effect, having the effect of making
\nthe Merger illegal or otherwise prohibiting consummation of the Merger.<\/p>\n
(c) HSR Act. The waiting period (and any extension thereof) applicable
\n ——-
\nto the Merger under the HSR Act shall have been terminated or shall have
\nexpired.<\/p>\n
(d) NASDAQ. The shares of Western Common Stock to be issued in the
\n ——
\nMerger and such other shares of Western Common Stock to be reserved for issuance
\nin connection with the Merger shall have been approved for listing on the
\nNASDAQ, subject to official notice of issuance.<\/p>\n
(e) Effectiveness of the Form S-4. The Form S-4 shall have been
\n —————————–
\ndeclared effective by the SEC under the Securities Act and no stop order
\nsuspending the effectiveness of the Form S-4 shall have been issued by the SEC
\nand no proceedings for that purpose shall have been initiated or threatened by
\nthe SEC.<\/p>\n
6.2 Additional Conditions to Obligations of Western.
\n ———————————————–<\/p>\n
The obligation of Western to effect the Merger and the transactions
\ncontemplated hereby is subject to the satisfaction, or waiver by Western, on or
\nprior to the Closing Date of the following conditions:<\/p>\n
(a) Representations and Warranties. (i) The representations and
\n ——————————
\nwarranties of Adaptive set forth in this Agreement that are qualified as to
\nMaterial Adverse Effect shall be true and correct as of the date of this
\nAgreement and as of immediately prior to the Effective Time (except to the
\nextent such representations and warranties shall refer to a specific date, in
\nwhich <\/p>\n
47<\/p>\n
case such representations and warranties shall have been so true and correct as
\nof such date) with the same force and effect as if then made and (ii) the
\nrepresentations and warranties of Adaptive set forth in this Agreement that are
\nnot qualified as to Material Adverse Effect shall be true and correct in all
\nmaterial respects as of the date of this Agreement and immediately prior to the
\nEffective Time (except to the extent such representations and warranties shall
\nhave been made as of an earlier date, in which case such representations and
\nwarranties shall have been true and correct in all material respects as of such
\nearlier date) with the same force and effect as if then made, except that this
\nclause (ii) shall be deemed to be satisfied so long as any failures of such
\nrepresentations and warranties to be true and correct, taken together, have not
\nhad and will not have a Material Adverse Effect on Adaptive; and Western shall
\nhave received a certificate of a senior executive officer and a senior financial
\nofficer of Adaptive to such effect.<\/p>\n
(b) Performance of Obligations of Adaptive. Adaptive shall have
\n ————————————–
\nperformed or complied in all material respects with all agreements and covenants
\nrequired to be performed by it under this Agreement at or prior to the Closing
\nDate, and Western shall have received a certificate of a senior executive
\nofficer and a senior financial officer of Adaptive to such effect.<\/p>\n
(c) Tax Opinion. Western shall have received from Simpson Thacher & ———–
\nBartlett, counsel to Western, on the Closing Date, a written opinion to the
\neffect that for federal income tax purposes (i) the Merger will constitute a
\nreorganization within the meaning of Section 368(a) of the Code and (ii) each of
\nAdaptive and Western will be a party to the reorganization within the meaning of
\nSection 368(b) of the Code. In rendering such opinion, counsel to Western shall
\nbe entitled to rely upon information, representations and assumptions provided
\nby Western and Adaptive substantially in the form of Exhibits 6.2(c)(1), and
\n6.2(c)(2) (allowing for such amendments to the representations as counsel to
\nWestern deems reasonably necessary).<\/p>\n
6.3 Additional Conditions to Obligations of Adaptive.
\n ————————————————<\/p>\n
The obligations of Adaptive to effect the Merger and the transactions
\ncontemplated hereby is subject to the satisfaction, or waiver by Adaptive, on or
\nprior to the Closing Date of the following additional conditions:<\/p>\n
(a) Representations and Warranties. (i) The representations and
\n ——————————
\nwarranties of Western and Merger Sub, as applicable, set forth in this Agreement
\nthat are qualified as to Material Adverse Effect shall be true and correct as of
\nthe date of this Agreement and as of immediately prior to the Effective Time
\n(except to the extent such representations and warranties shall refer to a
\nspecific date, in which case such representations and warranties shall have been
\nso true and correct as of such date) with the same force and effect as if then
\nmade and (ii) the representations and warranties of Western and Merger Sub, as
\napplicable, set forth in this Agreement that are not qualified as to Material
\nAdverse Effect shall be true and correct in all material respects the date of
\nthis Agreement and immediately prior to the Effective Time (except to the extent
\nsuch representations and warranties shall have been made as of an earlier date,
\nin which case such representations and warranties shall have been true and
\ncorrect in all material respects as of such earlier date) with the same force
\nand effect as if then made, except that this clause (ii) shall be deemed to be
\nsatisfied so long as any failures of such representations and warranties to be
\ntrue and correct, taken together, have not had and will not have a Material<\/p>\n
48<\/p>\n
Adverse Effect on Western; and Adaptive shall have received a certificate of a
\nsenior executive officer and a senior financial officer of each of Western and
\nMerger Sub to such effect.<\/p>\n
(b) Performance of Obligations of Western and Merger Sub. Each of
\n —————————————————-
\nWestern and Merger Sub shall have performed or complied in all material respects
\nwith all agreements and covenants required to be performed by it under this
\nAgreement at or prior to the Closing Dates, and Adaptive shall have received a
\ncertificate of a senior executive officer and a senior financial officer of each
\nof Western and Merger Sub to such effect.<\/p>\n
(c) Tax Opinion. Adaptive shall have received from Cooley Godward LLP,
\n ———–
\ncounsel to Adaptive, on the Closing Date, a written opinion to the effect that
\nfor federal income tax purposes (i) the Merger will constitute a reorganization
\nwithin the meaning of Section 368(a) of the Code, (ii) each of Adaptive and
\nWestern will be a party to the reorganization within the meaning of Section
\n368(b) of the Code. In rendering such opinion, counsel to Adaptive shall be
\nentitled to rely upon information, representations and assumptions provided by
\nWestern, Merger Sub and Adaptive substantially in the form of Exhibits 6.2(c)(1)
\nand 6.2(c)(2) (allowing for such amendments to the representations as counsel to
\nAdaptive deems reasonably necessary).<\/p>\n
ARTICLE VII
\n TERMINATION AND AMENDMENT<\/p>\n
7.1 Termination.
\n ———–<\/p>\n
This Agreement may be terminated at any time prior to the Effective
\nTime by action taken or authorized by the Board of Directors of the terminating
\nparty or parties and, except as provided below, whether before or after approval
\nof the matters presented in connection with the Merger by the stockholders of
\nAdaptive or Western:<\/p>\n
(a) By mutual written consent of Western and Adaptive;<\/p>\n
(b) By either Adaptive or Western, if the Effective Time shall not have
\noccurred on or before June 30, 2001 (the “Termination Date”); provided, however,
\n —————- ——– ——-
\nthat the right to terminate this Agreement under this Section 7.1(b) shall not
\nbe available to any party whose failure to fulfill any obligation under this
\nAgreement (including without limitation such party’s obligations set forth in
\nSection 5.3) has been the cause of, or resulted in, the failure of the Effective
\nTime to occur on or before the Termination Date;<\/p>\n
(c) By either Adaptive or Western, if any Governmental Entity (i) shall
\nhave issued an order, decree or ruling or taken any other action (which the
\nterminating party shall have used its reasonable best efforts to resist, resolve
\nor lift, as applicable, in accordance with and subject to Section 5.3)
\npermanently restraining, enjoining or otherwise prohibiting the transactions
\ncontemplated by this Agreement, and such order, decree, ruling or other action
\nshall have become final and nonappealable or (ii) shall have failed to issue an
\norder, decree or ruling or to take any other action, and such denial of a
\nrequest to issue such order, decree, ruling or take such other action shall have
\nbecome final and nonappealable (which order, decree, ruling or other action the
\nterminating party shall have used its reasonable best efforts to obtain, in
\naccordance with and subject to Section 5.3), in the case of each of (i) and (ii)
\nwhich is necessary <\/p>\n
49<\/p>\n
to fulfill the conditions set forth in Sections 6.1(c), (d) or (e), as
\napplicable; provided, however, that the right to terminate this Agreement under
\n ——– ——-
\nthis Section 7.1(c) shall not be available to any party whose failure to comply
\nwith Section 5.3 has been the cause of such action or inaction;<\/p>\n
(d) By either Adaptive or Western, if the approvals of the stockholders
\nof either Western or Adaptive contemplated by this Agreement shall not have been
\nobtained by reason of the failure to obtain the required vote at a duly held
\nmeeting of stockholders or of any adjournment thereof at which the vote was
\ntaken;<\/p>\n
(e) By Western, if Adaptive shall have (i) failed to make the Adaptive
\nRecommendation or (ii) materially breached its obligations under this Agreement
\nby reason of: a failure to call the Adaptive Stockholders Meeting in accordance
\nwith Section 5.1(b); a Change in the Adaptive Recommendation; approval or
\nrecommendation of (or any proposal to publicly approve or recommend) any
\nAcquisition Proposal; or a failure by Adaptive to prepare and mail to its
\nstockholders the Joint Proxy Statement\/Prospectus in accordance with Section
\n5.1(a);<\/p>\n
(f) By Adaptive, if Western shall have (i) failed to make the Western
\nRecommendation or (ii) materially breached its obligations under this Agreement
\nby reason of: a failure to call the Western Stockholders Meeting in accordance
\nwith Section 5.1(c); a Change in the Western Recommendation; approval or
\nrecommendation of (or any proposal to publicly approve or recommend) any
\nAcquisition Proposal; or a failure by Western to prepare and mail to its
\nstockholders the Joint Proxy Statement\/Prospectus in accordance with Section
\n5.1(a);<\/p>\n
(g) By Western, if Adaptive shall have breached or failed to perform
\nany of its representations, warranties, covenants or other agreements contained
\nin this Agreement, such that the conditions set forth in Section 6.2(a) or (b)
\nare not capable of being satisfied on or before the Termination Date;<\/p>\n
(h) By Adaptive, if Western shall have breached or failed to perform
\nany of its representations, warranties, covenants or other agreements contained
\nin this Agreement, such that the conditions set forth in Section 6.3(a) or (b)
\nare not capable of being satisfied on or before the Termination Date; or<\/p>\n
(i) By either Adaptive or Western, on the business day immediately
\npreceding the date scheduled for the Closing pursuant to Section 1.2, if either
\nof the following conditions are satisfied:<\/p>\n
(A) the Average Western Closing Price shall be less than or equal to
\n$10.00; or<\/p>\n
(B) the product of (x) 0.7 and (y) the ratio obtained by dividing the
\nFinal Index Price by the Initial Index Price, shall be greater than (z) the
\nratio obtained by dividing the Average Western Closing Price by the Average
\nWestern Starting Price;<\/p>\n
provided, however, that the right to terminate this Agreement under this Section
\n——– ——-
\n7.1(i) shall not be available to any party that has incurred a Section 7.1(i)
\nEvent.<\/p>\n
7.2 Effect of Termination.
\n ———————<\/p>\n
50<\/p>\n
(a) In the event of termination of this Agreement by either Adaptive or
\nWestern as provided in Section 7.1, this Agreement shall forthwith become void
\nand there shall be no liability or obligation on the part of Western or Adaptive
\nor their respective officers or directors except with respect to the second
\nsentence of Section 5.2, Section 5.5, this Section 7.2 and Article VIII, which
\nprovisions shall survive such termination, and except that, notwithstanding
\nanything to the contrary contained in this Agreement, neither Western nor
\nAdaptive shall be relieved or released from any liabilities or damages arising
\nout of its willful breach of this Agreement.<\/p>\n
(b) If (A) (I) either party shall terminate this Agreement pursuant to
\nSection 7.1(d) (provided that the basis for such termination is the failure to
\nobtain the Adaptive Stockholder Approval) or pursuant to Section 7.1(b) without
\nthe Adaptive Stockholder Meeting having occurred, (II) at any time after the
\ndate of this Agreement and before such termination an Acquisition Proposal with
\nrespect to Adaptive shall have been publicly announced or otherwise communicated
\nto the Board of Directors and stockholders of Adaptive and not withdrawn prior
\nto the Adaptive Stockholder Meeting having occurred, in the case of a
\ntermination pursuant to Section 7.1(d) (a “Adaptive Public Proposal”) and (III)
\n ————————
\nwithin nine months of such termination Adaptive or any of its Subsidiaries
\nenters into a definitive agreement with respect to, or consummates, any
\nAcquisition Proposal or (B) Western shall terminate this Agreement pursuant to
\nSection 7.1(e); then Adaptive shall promptly, but in no event later than the
\ndate of such termination (or in the case of clause (A), if later, the date
\nAdaptive or its Subsidiary enters into such agreement with respect to, or
\nconsummates, such Acquisition Proposal), pay Western an amount equal to
\n$27,500,000 by wire transfer of immediately available funds (less any amounts
\npreviously paid to Western pursuant to Section 7.2(d)).<\/p>\n
(c) If (A) (I) either party shall terminate this Agreement pursuant to
\nSection 7.1(d) (provided that the basis for such termination is the failure to
\nobtain the Western Stockholder Approval) or pursuant to Section 7.1(b) without
\nthe Western Stockholder Meeting having occurred, (II) at any time after the date
\nof this Agreement and before such termination an Acquisition Proposal with
\nrespect to Western shall have been publicly announced or otherwise communicated
\nto the Board of Directors and stockholders of Western and not withdrawn prior to
\nthe Western Stockholder Meeting having occurred, in the case of a termination
\npursuant to Section 7.1(d) (a “Western Public Proposal”) and (III) within nine
\n ———————–
\nmonths of such termination Western or any of its Subsidiaries enters into a
\ndefinitive agreement with respect to, or consummates, any Acquisition Proposal
\nor (B) Adaptive shall terminate this Agreement pursuant to Section 7.1(f); then
\nWestern shall promptly, but in no event later than the date of such termination
\n(or in the case of clause (A), if later, the date Western or its Subsidiary
\nenters into such agreement with respect to, or consummates, such Acquisition
\nProposal), pay Adaptive an amount equal to $27,500,000 by wire transfer of
\nimmediately available funds.<\/p>\n
(d) If either party shall terminate this Agreement pursuant to Section
\n7.1(d) (provided that the basis for such termination is the failure to obtain
\nthe Adaptive Stockholder Approval), then Adaptive shall promptly, but in no
\nevent later than the date of such termination, reimburse Western for all
\nout-of-pocket fees and expenses incurred by Western relating to the transactions
\ncontemplated by this Agreement, up to a maximum of $6,000,000, by wire transfer
\nof immediately available funds; provided, that no payment shall be made pursuant
\n ——–
\nto this sentence if a termination fee has been paid to Western pursuant to
\nSection 7.2(b).<\/p>\n
51<\/p>\n
(e) If (I) Western shall terminate this Agreement pursuant to Section
\n7.1(i) and (II) within nine months of such termination Western or any of its
\nSubsidiaries enters into a definitive agreement with respect to, or consummates,
\nany Acquisition Proposal (for purposes of this clause (II), the term
\n“Acquisition Proposal” shall have the meaning assigned to such term in Section
\n ——————–
\n5.4(a) except that references to “10%” and “20%” therein shall be deemed to be
\nreferences to “50%”), then Western shall promptly, but in no event later than
\nthe date Western or its Subsidiary enters into such agreement with respect to,
\nor consummates, such Acquisition Proposal, pay Adaptive an amount equal to
\n$27,500,000 by wire transfer of immediately available funds (less any amounts
\npreviously paid to Adaptive pursuant to Section 7.2(g)).<\/p>\n
(f) If (I) Adaptive shall terminate this Agreement pursuant to Section
\n7.1(i) and (II) within nine months of such termination Adaptive or any of its
\nSubsidiaries enters into a definitive agreement with respect to, or consummates,
\nany Acquisition Proposal (for purposes of this clause (II), the term
\n“Acquisition Proposal” shall have the meaning assigned to such term in Section
\n ——————–
\n5.4(a) except that references to “10%” and “20%” therein shall be deemed to be
\nreferences to “50%”), then Adaptive shall promptly, but in no event later than
\nthe date Adaptive or its Subsidiary enters into such agreement with respect to,
\nor consummates, such Acquisition Proposal, pay Western an amount equal to
\n$27,500,000 by wire transfer of immediately available funds (less any amounts
\npreviously paid to Western pursuant to Section 7.2(g)).<\/p>\n
(g) If either party shall terminate this Agreement pursuant to Section
\n7.1(i), then the party exercising such termination right shall promptly, but in
\nno event later than the date of such termination, reimburse the other party for
\nall out-of-pocket fees and expenses incurred by such other party relating to the
\ntransactions contemplated by this Agreement, up to a maximum of $6,000,000, by
\nwire transfer of immediately available funds.<\/p>\n
(h) The parties acknowledge that the agreements contained in this
\nSection 7.2 are an integral part of the transactions contemplated by this
\nAgreement, and that, without these agreements, neither party would enter into
\nthis Agreement; accordingly, if either party fails promptly to pay any amount
\ndue pursuant to this Section 7.2, and, in order to obtain such payment, the
\nother party commences a suit which results in a judgment against such party for
\nthe fee set forth in this Section 7.2, such party shall pay to the other party
\nits costs and expenses (including attorneys’ fees and expenses) in connection
\nwith such suit, together with interest on the amount of the fee at the prime
\nrate of Citibank, N.A. in effect on the date such payment was required to be
\nmade notwithstanding the provisions of Section 5.5. The parties agree that any
\nremedy or amount payable pursuant to this Section 7.2 shall not preclude any
\nother remedy or amount payable hereunder and shall not be an exclusive remedy
\nfor any breach of any representation, warranty, covenant or agreement contained
\nin this Agreement.<\/p>\n
7.3 Amendment.
\n ———<\/p>\n
This Agreement may be amended by the parties hereto, by action taken or
\nauthorized by their respective Boards of Directors, at any time before or after
\napproval of the matters presented in connection with the Merger by the
\nstockholders of Adaptive and Western, but, after any such approval, no amendment
\nshall be made which by law or in accordance with the rules of any relevant stock
\nexchange requires further approval by such stockholders without <\/p>\n
52<\/p>\n
such further approval. This Agreement may not be amended except by an instrument
\nin writing signed on behalf of each of the parties hereto.<\/p>\n
7.4 Extension; Waiver.
\n —————–<\/p>\n
At any time prior to the Effective Time, the parties hereto, by action
\ntaken or authorized by their respective Boards of Directors, may, to the extent
\nlegally allowed, (i) extend the time for the performance of any of the
\nobligations or other acts of the other parties hereto, (ii) waive any
\ninaccuracies in the representations and warranties contained herein or in any
\ndocument delivered pursuant hereto and (iii) waive compliance with any of the
\nagreements or conditions contained herein. Any agreement on the part of a party
\nhereto to any such extension or waiver shall be valid only if set forth in a
\nwritten instrument signed on behalf of such party. The failure of any party to
\nthis Agreement to assert any of its rights under this Agreement or otherwise
\nshall not constitute a waiver of those rights.<\/p>\n
ARTICLE VIII
\n GENERAL PROVISIONS<\/p>\n
8.1 Non-Survival of Representations, Warranties and Agreements.
\n ———————————————————-<\/p>\n
None of the representations, warranties, covenants and other agreements
\nin this Agreement or in any instrument delivered pursuant to this Agreement,
\nincluding any rights arising out of any breach of such representations,
\nwarranties, covenants, agreements and other provisions, shall survive the
\nEffective Time, except for those covenants, agreements and other provisions
\ncontained herein (including Section 5.6 and Section 5.9) that by their terms
\napply or are to be performed in whole or in part after the Effective Time and
\nthis Article VIII.<\/p>\n
8.2 Notices.
\n ——-<\/p>\n
All notices and other communications hereunder shall be in writing and
\nshall be deemed duly given (a) on the date of delivery if delivered personally,
\nor by telecopy or telefacsimile, upon confirmation of receipt, (b) on the first
\nBusiness Day following the date of dispatch if delivered by a recognized
\nnext-day courier service, or (c) on the tenth Business Day following the date of
\nmailing if delivered by registered or certified mail, return receipt requested,
\npostage prepaid. All notices hereunder shall be delivered as set forth below, or
\npursuant to such other instructions as may be designated in writing by the party
\nto receive such notice:<\/p>\n
(a) if to Western to:<\/p>\n
Western Multiplex Corporation
\n 1196 Borregas Avenue
\n Sunnyvale, California 94089
\n Fax: (408) 734-4573
\n Attention: Chief Financial Officer<\/p>\n
with a copy to:<\/p>\n
53<\/p>\n
Simpson Thacher & Bartlett
\n 10 Universal City Plaza, Suite 1850
\n Universal City, California 91608
\n Fax: (818) 755-7009
\n Attention: Daniel Clivner, Esq.<\/p>\n
(b) if to Adaptive to:<\/p>\n
Adaptive Broadband Corporation
\n 1143 Borregas Avenue
\n Sunnyvale, California 94089
\n Fax: (408) 743-3449
\n Attention: General Counsel<\/p>\n
with a copy to:<\/p>\n
Cooley Godward LLP
\n One Maritime Plaza, 20th Floor
\n San Francisco, California 94111
\n Fax: (415) 951-3699
\n Attention: Kenn Guernsey, Esq.<\/p>\n
8.3 Interpretation.
\n ————–<\/p>\n
When a reference is made in this Agreement to Articles, Sections,
\nExhibits or Schedules, such reference shall be to an Article or Section of or
\nExhibit or Schedule to this Agreement unless otherwise indicated. The table of
\ncontents and headings contained in this Agreement are for reference purposes
\nonly and shall not affect in any way the meaning or interpretation of this
\nAgreement. Whenever the words “include,” “includes” or “including” are used in
\nthis Agreement, they shall be deemed to be followed by the words “without
\nlimitation.” In addition, each Section of this Agreement is qualified by the
\nmatters set forth with respect to such Section on the Western Disclosure
\nSchedule, the Adaptive Disclosure Schedule and the Schedules to this Agreement,
\nas applicable, to the extent specified therein and such other Sections of this
\nAgreement to the extent a matter in such Section is disclosed in such a way as
\nto make its relevance called for by such other Section readily apparent.<\/p>\n
8.4 Counterparts.
\n ————<\/p>\n
This Agreement may be executed in one or more counterparts, all of
\nwhich shall be considered one and the same agreement and shall become effective
\nwhen one or more counterparts have been signed by each of the parties and
\ndelivered to the other party, it being understood that both parties need not
\nsign the same counterpart.<\/p>\n
8.5 Entire Agreement; No Third Party Beneficiaries.
\n ———————————————-<\/p>\n
(a) This Agreement, the Confidentiality Agreement and the exhibits and
\nschedules hereto and the other agreements and instruments of the parties
\ndelivered in connection <\/p>\n
54<\/p>\n
herewith constitute the entire agreement and supersede all prior agreements and
\nunderstandings, both written and oral, among the parties with respect to the
\nsubject matter hereof.<\/p>\n
(b) This Agreement shall be binding upon and inure solely to the
\nbenefit of each party hereto, and nothing in this Agreement, express or implied,
\nis intended to or shall confer upon any other Person any right, benefit or
\nremedy of any nature whatsoever under or by reason of this Agreement, other than
\nSection 5.6 (which is intended to be for the benefit of the Persons covered
\nthereby).<\/p>\n
8.6 Governing Law.
\n ————-<\/p>\n
This Agreement shall be governed and construed in accordance with the
\nlaws of the State of Delaware applicable to contracts executed and to be
\nperformed entirely within that state.<\/p>\n
8.7 Severability.
\n ————<\/p>\n
If any term or other provision of this Agreement is invalid, illegal or
\nincapable of being enforced by any law or public policy, all other terms and
\nprovisions of this Agreement shall nevertheless remain in full force and effect
\nso long as the economic or legal substance of the transactions contemplated
\nhereby is not affected in any manner materially adverse to any party. Upon such
\ndetermination that any term or other provision is invalid, illegal or incapable
\nof being enforced, the parties hereto shall negotiate in good faith to modify
\nthis Agreement so as to effect the original intent of the parties as closely as
\npossible in an acceptable manner in order that the transactions contemplated
\nhereby are consummated as originally contemplated to the greatest extent
\npossible.<\/p>\n
8.8 Assignment.
\n ———-<\/p>\n
Neither this Agreement nor any of the rights, interests or obligations
\nhereunder shall be assigned by any of the parties hereto, in whole or in part
\n(whether by operation of law or otherwise), without the prior written consent of
\nthe other party, and any attempt to make any such assignment without such
\nconsent shall be null and void. Subject to the preceding sentence, this
\nAgreement will be binding upon, inure to the benefit of and be enforceable by
\nthe parties and their respective successors and assigns.<\/p>\n
8.9 Submission to Jurisdiction; Waivers.
\n ———————————–<\/p>\n
Each of Western and Adaptive irrevocably agrees that any legal action
\nor proceeding with respect to this Agreement or for recognition and enforcement
\nof any judgment in respect hereof brought by the other party hereto or its
\nsuccessors or assigns may be brought and determined in the Chancery or other
\nCourts of the State of Delaware, and each of Western and Adaptive hereby
\nirrevocably submits with regard to any such action or proceeding for itself and
\nin respect to its property, generally and unconditionally, to the nonexclusive
\njurisdiction of the aforesaid courts. Each of Western and Adaptive hereby
\nirrevocably waives, and agrees not to assert, by way of motion, as a defense,
\ncounterclaim or otherwise, in any action or proceeding with respect to this
\nAgreement, (a) any claim that it is not personally subject to the jurisdiction
\nof the above-named courts for any reason other than the failure to lawfully
\nserve process, (b) that it <\/p>\n
55<\/p>\n
or its property is exempt or immune from jurisdiction of any such court or from
\nany legal process commenced in such courts (whether through service of notice,
\nattachment prior to judgment, attachment in aid of execution of judgment,
\nexecution of judgment or otherwise), (c) to the fullest extent permitted by
\napplicable law, that (i) the suit, action or proceeding in any such court is
\nbrought in an inconvenient forum, (ii) the venue of such suit, action or
\nproceeding is improper and (iii) this Agreement, or the subject matter hereof,
\nmay not be enforced in or by such courts and (d) any right to a trial by jury.<\/p>\n
8.10 Enforcement.
\n ———–<\/p>\n
The parties agree that irreparable damage would occur in the event
\nthat any of the provisions of this Agreement were not performed in accordance
\nwith their specific terms. It is accordingly agreed that the parties shall be
\nentitled to specific performance of the terms hereof, this being in addition to
\nany other remedy to which they are entitled at law or in equity.<\/p>\n
8.11 Definitions.
\n ———–<\/p>\n
As used in this Agreement:<\/p>\n
(a) “Affiliate” shall have the meaning set forth in Rule 12b-2 of the
\n ———-
\nrules and regulations promulgated under the Exchange Act.<\/p>\n
(b) “Average Western Closing Price” shall mean the average closing
\n —————————–
\nprices of Western Common Stock as reported on the NASDAQ for the 10 consecutive
\nTrading Days ending on the Determination Date, rounded to four decimal places.
\nIn the event Western pays, declares or otherwise effects a stock split, reverse
\nstock split, reclassification or stock dividend or stock distribution with
\nrespect to the Western Common Stock between the date hereof and the Effective
\nTime, appropriate adjustments will be made to the Average Western Closing Price.<\/p>\n
(c) “Average Western Starting Price” shall mean the average closing
\n ——————————
\nprices of Western Common Stock on the NASDAQ for the 10 consecutive Trading Days
\nbeginning on the second Trading Day following the public announcement of this
\nAgreement.<\/p>\n
(d) “Beneficial ownership” or “Beneficially own” shall have the
\n ——————– —————-
\nmeaning under Section 13(d) of the Exchange Act and the rules and regulations
\nthereunder.<\/p>\n
(e) “Board of Directors” means the Board of Directors of any specified
\n ——————
\nPerson and any committees thereof.<\/p>\n
(f) “Business Day” means any day on which banks are not required or
\n ————
\nauthorized to close in the City of New York.<\/p>\n
(g) “Determination Date” means the second business day prior to the
\n ——————
\ndate scheduled for the Closing pursuant to Section 1.2.<\/p>\n
(h) “Environmental Claim” means any written or oral notice, claim,
\n ——————-
\ndemand, action, suit, complaint, proceeding or other communication by any person
\nalleging liability or potential liability under or relating to any Environmental
\nLaws.<\/p>\n
56<\/p>\n
(i) “Environmental Laws” means all applicable foreign, federal, state
\n ——————
\nand local statutes, rules, regulations, ordinances, orders, decrees and common
\nlaw relating in any manner to contamination, pollution or protection of human
\nhealth or the environment.<\/p>\n
(j) “Environmental Permits” means all permits, licenses, registrations
\n ———————
\nand other governmental authorizations required under Environmental Laws for
\nAdaptive and its subsidiaries to conduct their operations.<\/p>\n
(k) “Hazardous Materials” means all hazardous, dangerous or toxic
\n ——————-
\nsubstances, including without limitation, petroleum (including without
\nlimitation crude oil or any fraction thereof), asbestos and asbestos-containing
\nmaterials, and polychlorinated biphenyls, and any other material that is
\nregulated pursuant to any Environmental Laws or that could result in liability
\nunder any Environmental Laws.<\/p>\n
(l) “Index Group” shall mean Airspan Networks, Inc; Breezecom Ltd;
\n ———–
\nCeragon Networks Ltd; DMC Stratex Networks, Inc; Floware Wireless Systems Ltd;
\nNetro Corporation; P-Com Inc; Telaxis Communications Corporation; Triton
\nNetworks Systems, Inc.; and Vyyo, Inc. In the event that the common stock of any
\nsuch company ceases to be publicly traded or a proposal shall be announced for
\nsuch company to be acquired or for such company to acquire another company or
\ncompanies in transactions with a value exceeding 25% of the acquirer’s market
\ncapitalization as of the first full trading day following the date of this
\nAgreement, such company will be removed from the Index Group.<\/p>\n
(m) “Initial Index Price” shall mean the average closing prices of the
\n ——————-
\ncompanies in the Index Group (which average shall not be weighted in accordance
\nwith the market capitalization of such companies), subject to adjustment as set
\nforth in the definition of Index Group) for the 10 consecutive Trading Day
\nperiod referred to in the definition of Average Western Starting Price.<\/p>\n
(n) “Final Index Price” shall mean the weighted average closing prices
\n —————–
\nof the companies in the Index Group (which average shall not be weighted in
\naccordance with the market capitalization of such companies) for the 10
\nconsecutive Trading Day period referred to in the definition of Average Western
\nClosing Price. If between the date of this Agreement and the Determination Date,
\nthe outstanding shares of any stock in the Index Group shall have been changed
\ninto a different number of shares or a different class by reason of any
\nreclassification, recapitalization, stock split, split-up, combination or
\nexchange of shares or a stock dividend or dividend payable in any other
\nsecurities or extraordinary cash dividend shall be declared with a record date
\nwithin such period, or any similar event shall have occurred, appropriate
\nadjustments shall be made to the Initial Index Price and the Final Index Price,
\nas the case may be, for purposes of this Agreement.<\/p>\n
(o) “Known” or “Knowledge” means, with respect to any party, the
\n —– ———
\nknowledge of such party’s executive officers after reasonable inquiry.<\/p>\n
(p) “Material Adverse Effect” means, with respect to any entity any
\n ———————–
\nevent, change, circumstance or effect that is or is reasonably likely to be
\nmaterially adverse to (i) the business, assets, liabilities, prospects,
\nfinancial condition or results of operations of such entity <\/p>\n
57<\/p>\n
and its Subsidiaries taken as a whole or (ii) the ability of such entity to
\nconsummate the transactions contemplated by this Agreement; provided, however,
\n ——– ——-
\nthat, for purposes of clause (i), a Material Adverse Effect shall not include
\nany event, change, circumstance or effect relating (w) to any employee attrition
\ncaused by the announcement of this Agreement and the transactions contemplated
\nhereby, (x) to the economy or financial markets in general or (y) in general to
\nthe industries in which such entity operates (e.g., fixed wireless
\ncommunications equipment) and not specifically relating to (or having the effect
\nof specifically relating to or having a materially disproportionate effect
\n(relative to most other industry participants) on) such entity or (z) solely to
\nany reduction in the trading price of Western Common Stock or Adaptive Common
\nStock on the NASDAQ prior to the Effective Time that is not in connection with
\nany other event, change, circumstance or effect that would otherwise constitute
\na Material Adverse Effect; provided that it is acknowledged and agreed that this
\nclause (z) shall not affect either party’s rights to terminate this Agreement
\npursuant to Section 7.1(i).<\/p>\n
(q) “The other party” means, with respect to Adaptive, Western and, with
\n —————
\nrespect to Western, Adaptive.<\/p>\n
(r) “Person” means an individual, corporation, limited liability company,
\n ——
\npartnership, association, trust, unincorporated organization, other entity or
\ngroup (as defined in the Exchange Act).<\/p>\n
(s) “Section 7.1(i) Event”, with respect to a party seeking to terminate
\n ——————–
\nthis Agreement pursuant to Section 7.1(i) hereof, means any news release, public
\nannouncement (other than an announcement of the transaction contemplated by this
\nAgreement) or filing, or any other statement or communication that is required
\nto be publicly disseminated pursuant to the federal securities laws, made by the
\nparty seeking to terminate this Agreement pursuant to Section 7.1(i) hereof,
\nfollowing which there occurs a decline of 20 percent or more in the average of
\nthe closing prices of either party’s common stock on the NASDAQ for five
\nconsecutive trading days following such news release, public announcement,
\nfiling, statement or other communication, as compared to the average of the
\nclosing prices of the same party’s common stock on the NASDAQ for the five
\ntrading days prior to such news release, public announcement, filing, statement
\nor other communication.<\/p>\n
(t) “Subsidiary” when used with respect to any party means any corporation
\n ———-
\nor other organization, whether incorporated or unincorporated, at least a
\nmajority of the securities or other interests of which having by their terms
\nordinary voting power to elect a majority of the Board of Directors or others
\nperforming similar functions with respect to such corporation or other
\norganization is directly or indirectly owned or controlled by such party or by
\nany one or more of its Subsidiaries, or by such party and one or more of its
\nSubsidiaries.<\/p>\n
(u) “Tax” (and, with correlative meaning, “Taxes”) means any federal,
\n — —–
\nstate, local or foreign income, gross receipts, property, sales, use, license,
\nexcise, franchise, employment, payroll, withholding, alternative or add on
\nminimum, ad valorem, transfer or excise tax, or any other tax, custom, duty,
\ngovernmental fee or other like assessment or charge of any kind whatsoever,
\ntogether with any interest or penalty, imposed by any taxing authority or any
\nobligation to pay Taxes imposed on any entity for which a party to this
\nAgreement is liable as a result of any indemnification provision or other
\ncontractual obligation.<\/p>\n
58<\/p>\n
(v) “Tax Return” means any return, report or similar statement required to
\n ———-
\nbe filed with respect to any Tax (including any attached schedules), including,
\nwithout limitation, any information return, claim for refund, amended return or
\ndeclaration of estimated Tax.<\/p>\n
(w) “Trading Day” shall mean a day on which trading generally takes place
\n ———–
\non the NASDAQ and on which trading in Western Common Stock has not been halted
\nor suspended.<\/p>\n
59<\/p>\n
IN WITNESS WHEREOF, Western, Adaptive and Merger Sub have caused this
\nAgreement to be signed by their respective officers thereunto duly authorized,
\nall as of the date first written above.<\/p>\n
WESTERN MULTIPLEX CORPORATION<\/p>\n
By: \/s\/ Jonathan N. Zakin
\n ——————————————-
\n Name: Jonathan N. Zakin
\n Title: Chairman and Chief Executive Officer<\/p>\n
ADAPTIVE BROADBAND CORPORATION<\/p>\n
By: \/s\/ Frederick D. Lawrence
\n ——————————————-
\n Name: Frederick D. Lawrence
\n Title: Chairman and Chief Executive Officer<\/p>\n
WA MERGER SUB, INC.<\/p>\n
By: \/s\/ Jonathan N. Zakin
\n ———————————–
\n Name: Jonathan N. Zakin
\n Title: President<\/p>\n
60<\/p>\n
——————————————————————————–<\/p>\n
Exhibit A
\n(please see exhibit 10.2)<\/p>\n
Exhibit B
\n(please see exhibit 10.1)<\/p>\n
Exhibit C
\n(please see exhibit 99.1)<\/p>\n
EXHIBIT 6.2(c)(1)<\/p>\n
Western Multiplex Corporation
\n 1196 Borregas Avenue
\n Sunnyvale, California 94089<\/p>\n
______, 2000<\/p>\n
Simpson Thacher & Bartlett
\n425 Lexington Avenue
\nNew York, New York 10017<\/p>\n
Cooley Godward LLP
\nOne Maritime Plaza, 20th Floor
\nSan Francisco, California 94111-3580<\/p>\n
Ladies and Gentlemen:<\/p>\n
We refer to the Agreement and Plan of Merger, dated as of November 12, 2000
\n(the “Agreement”) among Western Multiplex Corporation, a Delaware corporation
\n(“Western”), WA Merger Sub, Inc., a Delaware corporation and a direct
\nwholly-owned subsidiary of Western (“Merger Sub”), and Adaptive Broadband
\nCorporation, a Delaware corporation (“Adaptive”) which provides for the merger
\n(the “Merger”) of Merger Sub with and into Adaptive on the terms and conditions
\nset forth, the time at which the Merger becomes effective being hereafter
\nreferred to as the “Effective Time.” It is a condition to the consummation of
\nthe Merger that Simpson Thacher & Bartlett, counsel to Western, and Cooley
\nGodward LLP, counsel to Adaptive, render opinions regarding certain United
\nStates federal income tax consequences of the Merger. Capitalized terms not
\ndefined herein have the meanings specified in the Agreement.<\/p>\n
In connection with such opinions to be rendered by each of you, and
\nacknowledging that each of you will rely, with Western’s consent, upon the
\nstatements and representations made in this letter in rendering such opinions,
\nthe undersigned certifies and represents to each of you on behalf of Western,
\nafter due investigation and inquiry that the statements and representations
\nstated herein are true, correct and complete in all respects at the date hereof
\nand except to the extent written notification to the contrary is received by you
\nbefore the Effective Time will be true, correct and complete in all respects as
\nof the Effective Time (as if made as of the Effective Time and thereafter, where
\nrelevant):<\/p>\n
1. The facts, representations and covenants relating to the Merger of
\nMerger Sub with and into Adaptive, as reflected in the Merger Agreement and the
\nancillary agreement, thereto, and the Joint Proxy Prospectus prepared by
\nAdaptive and Western are, insofar as such facts, pertain to Western and Merger
\nSub, true, accurate and complete in all material respects. The Merger will be
\ncarried out in accordance with the Merger Agreement, and none of the material
\nterms and conditions therein have been or will be materially modified by
\nWestern, or to the knowledge of the management of Western, by Adaptive.<\/p>\n
61<\/p>\n
2. Pursuant to the Merger, Merger Sub will merger with and into Adaptive,
\nand Adaptive will acquire all of the assets and liabilities of Merger Sub. At
\nleast ninety percent (90%) of the fair market value of the net assets and at
\nleast seventy percent (70%) of the fair market value of the gross assets held by
\nAdaptive immediately prior to the Merger and at least ninety percent (90%) of
\nthe fair market value of the net assets and at least seventy percent (70%) of
\nthe fair market value of the gross assets held by Merger Sub immediately prior
\nto the Merger will be held by Adaptive after the Merger. For the purpose of
\ndetermining the percentage of Adaptive’s and Merger Sub’s net and gross assets
\nheld by Adaptive immediately following the Merger, the following assets will be
\ntreated as property held by Adaptive or Merger Sub, as the case may be,
\nimmediately prior to the Merger but not by Adaptive subsequent to the Merger:
\n(i) assets disposed of by Adaptive or Merger Sub (other than assets transferred
\nby Merger Sub to Adaptive in the Merger) prior to or subsequent to the Merger
\nand in contemplation thereof (including without limitation any asset disposed of
\nby Adaptive or Merger Sub, other than in the ordinary course of business,
\npursuant to a plan or intent existing during the period ending at the Effective
\nTime and beginning with the commencement of negotiations (whether formal or
\ninformal) with Adaptive regarding the Merger (the “Pre-Merger Period”)), (ii)
\nassets used by Adaptive or Merger Sub to pay expenses or liabilities incurred in
\nconnection with the Merger, (iii) assets used by Adaptive or Merger Sub to make
\npayments to Adaptive stockholders in lieu of fractional shares of Western Common
\nStock and (iv) assets used by Adaptive or Merger Sub to make distribution,
\nredemption or other payments in respect of Adaptive stock or rights to acquire
\nsuch stock (including payments treated as such for tax purposes) that are made
\nin contemplation of the Merger or related thereto.<\/p>\n
3. The Merger is being undertaken for business reasons and not for the
\npurpose of tax avoidance.<\/p>\n
4. The Adaptive Common Stock will be surrendered pursuant to the Merger in
\nan arm’s-length exchange, and the fair market value of Western Common Stock and
\ncash in lieu of a fractional share of Western Common Stock received by each
\nAdaptive stockholder will be approximately equal to the fair market value of
\nAdaptive Common Stock surrendered by such stockholder in the Merger. In
\nconnection with the Merger, no holder of Adaptive Common Stock will receive in
\nexchange for Adaptive Common Stock, directly or indirectly, any consideration
\nother than Western Common Stock and cash in lieu of a fractional share thereof.<\/p>\n
5. As of the Effective Time, neither Western nor any corporation related to
\nWestern will, in connection with the Merger, (i) be under any obligation, or
\nwill have entered into any agreement or understanding, directly or indirectly,
\nto redeem or repurchase any of the Western Common Stock issued to stockholders
\nof Adaptive in the Merger or to make any extraordinary distribution in respect
\nof such Western Common Stock or (ii) have any plan or intention, directly or
\nindirectly, to reacquire any of the Western Common Stock issued in the Merger;
\nprovided, however, that Western may adopt an open market stock repurchase
\nprogram that satisfies the requirements of Revenue Ruling 99-58. After the
\nMerger, no dividends or distributions will be made to the former Adaptive
\nstockholders by Western other than regular, normal dividends or distributions
\nmade to all holders of Western Common Stock. Additionally, prior to and in
\nconnection with the Merger, neither Western nor any corporation related to
\nWestern will have acquired Adaptive stock, directly or indirectly, with
\nconsideration other than stock of Western. For purposes of this representation
\nletter, two corporations shall be treated as <\/p>\n
62<\/p>\n
related to one another if immediately prior to or immediately after the Merger,
\n(a) the corporations are members of the same affiliated group (within the
\nmeaning of section 1504 of the Code, but determined without regard to section
\n1504(b) of the Code) or (b) one corporation owns 50% or more of the total
\ncombined voting power of all classes of stock of the other corporation that are
\nentitled to vote or 50% or more of the total value of all classes of stock of
\nthe other corporation (applying the attribution rules of Section 318 of the Code
\nas modified pursuant to section 304(c)(3)(B) of the Code). For purposes of this
\nrepresentation, a corporation that is a partner in a partnership will be treated
\nas owning or acquiring any stock owned or acquired, as the case may be, by the
\npartnership and as having furnished its share of any consideration furnished by
\nthe partnership to acquire the stock, in each case, in accordance with its
\ninterest in the partnership.<\/p>\n
6. Neither Western nor any corporation related to Western has any plan or
\nintention, following the Merger: (i) to liquidate Adaptive; (ii) to merge
\nAdaptive with or into another corporation (except pursuant to the Merger); (iii)
\nto sell or otherwise dispose of shares of the stock of Adaptive, except for
\ntransfers (including successive transfers) of such stock to corporations
\ncontrolled by the transferor corporation at the time of such transfer, within
\nthe meaning of Treasury Regulation section 1.368-2(k) or (iv) to cause Adaptive
\nto sell, distribute, transfer or otherwise dispose of any of its assets, or any
\nof the assets it acquired from Merger Sub, except for dispositions made in the
\nordinary course of business or transfers (including successive transfers) of
\nassets to one or more corporations controlled, in the case of each transfer, by
\nthe transferor corporation, within the meaning of Treasury Regulation section
\n1.368-2(k). Western has no plan or intention to (i) cause Adaptive, after the
\nEffective Time, to issue additional shares of stock that would result in Western
\nlosing control of Adaptive or (ii) otherwise take any action that could result
\nin Western losing control of Adaptive following the Merger. For purposes of this
\nrepresentation letter, “control” with respect to a corporation shall mean
\nownership of at least (i) 80% of the total combined voting power of all classes
\nof stock entitled to vote and (ii) 80% of the total number of shares of each
\nother class of stock of the corporation.<\/p>\n
7. To the best knowledge of the management of Western, there is no plan or
\nintention on the part of stockholders of Adaptive to sell, exchange or otherwise
\ntransfer ownership of (including by derivative transactions such as an equity
\nswap which would have the economic effect of a transfer of ownership) any share
\nof Western Common Stock (other than fractional shares of Western Common Stock
\nfor which holders of Western Common Stock receive cash in the Merger) to
\nWestern, Adaptive or any person related to Western or Adaptive, directly or
\nindirectly (including through partnerships or through third parties in
\nconnection with a plan to so transfer ownership).<\/p>\n
8. Following the Merger, Western will cause Adaptive or another member of
\nAdaptive’ “qualified group” to continue the “historic business” of Adaptive or
\nuse a “significant portion” of Adaptive’s “historic business assets” in a
\nbusiness, as such terms are used in Treasury Regulation section 1.368-1(d). For
\npurposes of this representation, Adaptive’ “qualified group” means, pursuant to
\nTreasury Regulation section 1.368-1(d)(4)(ii), one or more chains of
\ncorporations connected through stock ownership with Adaptive, but only if
\nAdaptive owns directly stock representing control in at least one other
\ncorporation, and stock representing control in each of the corporations (except
\nAdaptive) is owned directly by one of the other <\/p>\n
63<\/p>\n
corporations. In addition, Adaptive will be treated as owning its proportionate
\nshare of Adaptive’ business assets used in a business of any partnership in
\nwhich members of Adaptive’ qualified group either own a significant interest or
\nhave active and substantial management functions as a partner with respect to
\nthat partnership business.<\/p>\n
9. Each of Western and its stockholders has paid and will pay their
\nrespective expenses, if any, incurred in connection with the Merger, and Western
\nhas not agreed to assume, nor will it assume, directly or indirectly, any
\nexpense or other liability, whether fixed or contingent, of any holder of
\nAdaptive Common Stock in connection with or as part of the Merger or any related
\ntransaction. Notwithstanding the foregoing, (i) any liability for transfer taxes
\nincurred by a holder of Adaptive Common Stock will be paid by Adaptive, and in
\nno event by Western, and (ii) expenses incurred in connection with the filing,
\nprinting and mailing of the Joint Proxy Statement\/Prospectus and Form S-4 will
\nbe borne equally by Adaptive and Western.<\/p>\n
10. There is, and at the Effective Time will be, no intercorporate
\nindebtedness existing between Western and Adaptive or between Merger Sub and
\nAdaptive that was issued, acquired or will be settled at a discount.<\/p>\n
11. Neither Western nor Merger Sub, as the case may be, will (i) elect, or
\nhave in effect an election, to be treated as a “regulated investment company” or
\nas a “real estate investment trust” or file any tax return consistent with such
\ntreatment or (ii) be a corporation 50% or more of the fair market value of whose
\ntotal assets are stock or securities and 80% or more of the fair market value of
\nwhose total assets are assets held for investment. In making the determinations
\ndescribed in (ii) above, (x) the stock and securities of any subsidiary of
\nWestern shall be disregarded and Western shall be deemed to own its ratable
\nshare of such subsidiary’s assets and (y) a corporation shall be considered to
\nbe a subsidiary of Western if Western owns 50% or more of the combined voting
\npower of all classes of the stock of such subsidiary that are entitled to vote,
\nor 50% or more of the total value of all classes of the outstanding stock of
\nsuch subsidiary. In addition, in determining the fair market value of Western’s
\ntotal assets for the purposes of making this representation, Western shall
\nexclude any cash and cash items (such as receivables), government securities
\nand, to the extent provided in the applicable Treasury regulations, any assets
\nacquired (through incurring indebtedness or otherwise) for the purposes of
\ncausing Western to not be characterized as an entity described in (i) or (ii) of
\nthe first sentence of this paragraph or causing Western to meet the requirements
\nof section 368(a)(2)(F)(ii) of the Code.<\/p>\n
12. None of the compensation to be received by any stockholder-employees
\nof Adaptive for services rendered after the Effective Time, and none of the
\ncompensation to be received by any stockholder-employees or stockholder-
\nindependent contractors of Adaptive from Western for services rendered either
\nbefore or after the Effective Time, will be separate consideration for, or
\nallocable to, any of such stockholder-employee’s or stockholder-independent
\ncontractor’s shares of Adaptive stock; none of the shares of Western Common
\nStock to be received by any stockholder-employees or stockholder-independent
\ncontractors of Adaptive in connection with the Merger will be separate
\nconsideration for, or allocable to, any employment, consulting or similar
\nagreement or arrangement or any covenant not to compete or release with respect
\nto services rendered after the Effective Time; and the compensation paid to any
\nstockholder-employees or stockholder-independent contractors of Adaptive for
\nservices <\/p>\n
64<\/p>\n
rendered will be for services actually rendered (or to be rendered) and
\nwill be commensurate with amounts paid to third parties bargaining at arm’s-
\nlength for similar services.<\/p>\n
13. Merger Sub is being formed solely to effect the Merger and it will not
\nconduct any business or other activities other than the issuance of its stock to
\nWestern prior to the Merger. Merger Sub will not have any liabilities that will
\nbe assumed by Adaptive, and will not transfer to Adaptive in the Merger any
\nassets subject to liabilities.<\/p>\n
14. Pursuant to the Merger, all shares of Adaptive Common Stock will be
\nexchanged solely for Western Common Stock or for cash in lieu of fractional
\nshares of Western Common Stock that would otherwise be issued to stockholders of
\nAdaptive. For purposes of this representation, shares of Adaptive Common Stock
\nexchanged for cash or other property originating with Western or a party related
\nto Western will be treated as outstanding Adaptive Common Stock at the Effective
\nTime.<\/p>\n
15. Prior to the Merger and through the Effective Time, Western will be in
\ncontrol of Merger Sub.<\/p>\n
16. As of the Effective Time neither Western nor any corporation related to
\nWestern will own beneficially or of record, or will have owned beneficially or
\nof record during the five years preceding the Effective Time, any shares of
\nAdaptive Common Stock or other securities, options, warrants or instruments
\ngiving the holder thereof the right to acquire Adaptive Common Stock or other
\nsecurities issued by Adaptive.<\/p>\n
17. The Western Common Stock into which Adaptive Common Stock will be
\nconverted in the Merger is stock entitled to vote for the directors of Western
\nand on all other matters put forth to the shareholders of Western.<\/p>\n
18. The payment of cash in lieu of fractional shares of Western Common
\nStock that would otherwise be issued to stockholders of Adaptive in the Merger
\nis solely for the purpose of avoiding the expense and inconvenience to Western
\nof issuing and transferring fractional shares of Western Common Stock and does
\nnot represent separately bargained-for consideration. The total cash
\nconsideration that will be paid in the Merger to stockholders of Adaptive
\ninstead of issuing fractional shares of Western Common Stock will not exceed one
\npercent of the total consideration that will be issued in the Merger to
\nstockholders of Adaptive in exchange for their shares of Adaptive Common Stock.<\/p>\n
19. With respect to each instance, if any, in which shares of Adaptive
\nstock have been purchased by a stockholder of Western (a “Stockholder”) during
\nthe Pre-Merger Period (a “Stock Purchase”): (i) the Stock Purchase was not made
\nby such Stockholder as a representative, or for the benefit, of Western; (ii)
\nthe purchase price paid by such Stockholder pursuant to the Stock Purchase was
\nnot and will not be advanced, and was not and will not be reimbursed, either
\ndirectly or indirectly, by Western; (iii) at no time was such Stockholder or any
\nother party required or obligated to surrender to Western Adaptive stock
\nacquired in the Stock Purchase, and neither such Stockholder nor any other party
\nwill be required to surrender to Western the Western Common Stock for which such
\nshares of Adaptive stock will be exchanged <\/p>\n
65<\/p>\n
in the Merger; and (iv) the Stock Purchase was not a formal or informal
\ncondition to consummation of the Merger.<\/p>\n
20. Following the Merger, Western, Merger Sub and Adaptive will comply with
\nthe record-keeping and information filing requirements of Treasury Regulations
\nSection 1.368-3.<\/p>\n
21. The Merger will be reported by Western and Adaptive on their respective
\nfederal income tax returns as a reorganization within the meaning of Section
\n368(a) of the Code.<\/p>\n
22. The undersigned is authorized to make all of the statements and
\nrepresentations set forth herein on behalf of Western and Merger Sub.<\/p>\n
Very truly yours,<\/p>\n
Western Multiplex Corporation<\/p>\n
By:
\n —————————
\n Name:
\n Title:<\/p>\n
66<\/p>\n
EXHIBIT 6.2(c)(2)<\/p>\n
Adaptive Broadband Corporation
\n 1143 Borregas Avenue
\n Sunnyvale, California 94089<\/p>\n
_____, 2000<\/p>\n
Simpson Thacher & Bartlett
\n425 Lexington Avenue
\nNew York, New York 10017<\/p>\n
Cooley Godward LLP
\nOne Maritime Plaza, 20th Floor
\nSan Francisco, California 94111-3580<\/p>\n
Ladies and Gentlemen:<\/p>\n
We refer to the Agreement and Plan of Merger, dated as of November 12, 2000
\n(the “Agreement”) among Western Multiplex Corporation, a Delaware corporation
\n(“Western”), WA Merger Sub, Inc., a Delaware corporation and a direct
\nwholly-owned subsidiary of Western (“Merger Sub”), and Adaptive Broadband
\nCorporation, a Delaware corporation (“Adaptive”), which provides for the merger
\n(the “Merger”) of Merger Sub with and into Adaptive on the terms and conditions
\nset forth, the time at which the Merger becomes effective being hereafter
\nreferred to as the “Effective Time.” It is a condition to the consummation of
\nthe Merger that Simpson Thacher & Bartlett, counsel to Western, and Cooley
\nGodward LLP, counsel to Adaptive, render opinions regarding certain United
\nStates federal income tax consequences of the Merger. Capitalized terms not
\ndefined herein have the meanings specified in the Agreement.<\/p>\n
In connection with such opinions to be rendered by each of you, and
\nacknowledging that each of you will rely, with Adaptive’ consent, upon the
\nstatements and representations made in this letter in rendering such opinions,
\nthe undersigned hereby certifies and represents to each of you on behalf of
\nAdaptive, after due investigation and inquiry that the statements and
\nrepresentations stated herein are true, correct and complete in all respects at
\nthe date hereof and except to the extent written notification to the contrary is
\nreceived by you before the Effective Time will be true, correct and complete in
\nall respects as of the Effective Time (as if made as of the Effective Time and
\nthereafter, where relevant):<\/p>\n
1. The facts, representations and covenants relating to the Merger of
\nMerger Sub with and into Adaptive, as reflected in the Merger Agreement and the
\nancillary agreement, thereto, and the Joint Proxy Prospectus prepared by
\nAdaptive and Western are, insofar as such fact, pertain to Adaptive, true,
\naccurate and complete in all material respects. The Merger will be carried out
\nin accordance with the Merger Agreement, and none of the material term and
\nconditions therein have been or will be materially or modified by Adaptive, or
\nto the knowledge of the management of Adaptive, by Western.<\/p>\n
2. Pursuant to the Merger, Merger Sub will merger with and into Adaptive,
\nand Adaptive will acquire all of the assets and liabilities of Merger Sub. At
\nleast ninety percent <\/p>\n
67<\/p>\n
(90%) of the fair market value of the net assets and at least seventy percent
\n(70%) of the fair market value of the gross assets held by Adaptive immediately
\nprior to the Merger and at least ninety percent (90%) of the fair market value
\nof the net assets and at least seventy percent (70%) of the fair market value of
\nthe gross assets held by Merger Sub immediately prior to the Merger will be held
\nby Adaptive after the Merger. For the purpose of determining the percentage of
\nAdaptive’s and Merger Sub’s net and gross assets held by Adaptive immediately
\nfollowing the Merger, the following assets will be treated as property held by
\nAdaptive or Merger Sub, as the case may be, immediately prior to the Merger but
\nnot by Adaptive subsequent to the Merger: (i) assets disposed of by Adaptive or
\nMerger Sub (other than assets transferred by Merger Sub to Adaptive in the
\nMerger) prior to or subsequent to the Merger and in contemplation thereof
\n(including without limitation any asset disposed of by Adaptive or Merger Sub,
\nother than in the ordinary course of business, pursuant to a plan or intent
\nexisting during the period ending at the Effective Time and beginning with the
\ncommencement of negotiations (whether formal or informal) with Adaptive
\nregarding the Merger (the “Pre-Merger Period”)), (ii) assets used by Adaptive or
\nMerger Sub to pay expenses or liabilities incurred in connection with the
\nMerger, (iii) assets used by Adaptive or Merger Sub to make payments to Adaptive
\nstockholders in lieu of fractional shares of Western Common Stock and (iv)
\nassets used by Adaptive or Merger Sub to make distribution, redemption or other
\npayments in respect of Adaptive stock or rights to acquire such stock (including
\npayments treated as such for tax purposes) that are made in contemplation of the
\nMerger or related thereto.<\/p>\n
3. The Merger is being undertaken for business reasons and not for the
\npurpose of tax avoidance.<\/p>\n
4. The Adaptive Common Stock will be surrendered pursuant to the Merger in
\nan arm’s-length exchange, and the fair market value of Western Common Stock and
\ncash in lieu of a fractional share of Western Common Stock received by each
\nAdaptive stockholder will be approximately equal to the fair market value of
\nAdaptive Common Stock surrendered by such stockholder in the Merger. In
\nconnection with the Merger, no holder of Adaptive Common Stock will receive in
\nexchange for their Adaptive Common Stock, directly or indirectly, any
\nconsideration other than Western Common Stock and cash in lieu of a fractional
\nshare thereof.<\/p>\n
5. Adaptive, prior to and in connection with the Merger, has neither (i)
\nredeemed, directly or indirectly, any of its stock, nor (ii) made any
\ndistributions with respect to its stock, in either case, where the consideration
\nreceived by a stockholder of Adaptive could be treated as received in the
\nMerger, or for purposes of Section 356 of the Internal Revenue Code of 1986, as
\namended, (the “Code”), would be so treated if the stockholder of Adaptive had
\nreceived stock of Western in the Merger.<\/p>\n
6. To the best knowledge of the management of Adaptive, there is no plan or
\nintention on the part of stockholders of Adaptive to sell, exchange or otherwise
\ntransfer ownership of (including by derivative transactions such as an equity
\nswap which would have the economic effect of a transfer of ownership) any share
\nof Western Common Stock (other than fractional shares of Western Common Stock
\nfor which holders of Western Common Stock receive cash in the Merger) to
\nWestern, Adaptive or any corporation related to Western or Adaptive, directly or
\nindirectly (including through partnerships or through third parties in
\nconnection with a plan to so transfer ownership). For purposes of this
\nrepresentation letter, two <\/p>\n
68<\/p>\n
corporations shall be treated as related to one another if immediately prior to
\nor immediately after the Merger, (a) the corporations are members of the same
\naffiliated group (within the meaning of section 1504 of the Code, but determined
\nwithout regard to section 1504(b) of the Code) or (b) one corporation owns 50%
\nor more of the total combined voting power of all classes of stock of the other
\ncorporation that are entitled to vote or 50% or more of the total value of
\nshares of all classes of stock of the other corporation (applying the
\nattribution rules of section 318 of the Code as modified pursuant to section
\n304(c)(3)(B) of the Code). For purposes of this representation, a corporation
\nthat is a partner in a partnership will be treated as owning or acquiring any
\nstock owned or acquired, as the case may be, by the partnership and as having
\nfurnished its share of any consideration furnished by the partnership to acquire
\nthe stock, in each case, in accordance with its interest in the partnership.<\/p>\n
7. No assets of Adaptive have been sold, transferred or otherwise disposed
\nof so as to prevent Adaptive from continuing the “historic business” of Adaptive
\nor from using a “significant portion” of Adaptive’ “historic business assets” in
\na business following the Merger, as such terms are used in Treasury Regulation
\nsection 1.368-1(d). For purposes of this representation, Adaptive’ “qualified
\ngroup” means, pursuant to Treasury Regulation section 1.368-1(d)(4)(ii), one or
\nmore chains of corporations connected through stock ownership with Adaptive, but
\nonly if Adaptive owns directly stock representing control in at least one other
\ncorporation, and stock representing control in each of the corporations (except
\nAdaptive) is owned directly by one of the other corporations. In addition,
\nAdaptive will be treated as owning its proportionate share of Adaptive’ business
\nassets used in a business of any partnership in which members of Adaptive’
\nqualified group either own a significant interest or have active and substantial
\nmanagement functions as a partner with respect to that partnership business. For
\npurposes of this representation letter, “control” with respect to a corporation
\nshall mean ownership of at least (i) 80% of the total combined voting power of
\nall classes of stock entitled to vote and (ii) 80% of the total number of shares
\nof each other class of stock of the corporation<\/p>\n
8. Each of Adaptive and its stockholders has paid and will pay their
\nrespective expenses, if any, incurred in connection with the Merger, and Western
\nhas not agreed to assume, nor will it assume, directly or indirectly, any
\nexpense or other liability, whether fixed or contingent, of any holder of
\nAdaptive Common Stock in connection with or as part of the Merger or any related
\ntransaction. Notwithstanding the foregoing, (i) any liability for transfer taxes
\nincurred by a holder of Adaptive Common Stock will be paid by Adaptive, and in
\nno event by Western, and (ii) Expenses incurred in connection with the filing,
\nprinting and mailing of the Joint Proxy Statement\/Prospectus and Form S-4 will
\nbe borne equally by Adaptive and Western.<\/p>\n
9. There is, and at the Effective Time will be, no intercorporate
\nindebtedness existing between Western and Adaptive or between Merger Sub and
\nAdaptive that was issued, acquired or will be settled at a discount.<\/p>\n
10. Adaptive will not (i) elect, or have in effect an election, to be
\ntreated as a “regulated investment company” or as a “real estate investment
\ntrust” or file any tax return consistent with such treatment or (ii) be a
\ncorporation 50% or more of the fair market value of whose total assets are stock
\nor securities and 80% or more of the fair market value of whose total assets are
\nassets held for investment. In making the determinations described in (ii)
\nabove, (x) the stock and securities of any subsidiary of Adaptive shall be
\ndisregarded and Adaptive shall be<\/p>\n
69<\/p>\n
deemed to own its ratable share of such subsidiary’s assets and (y) a
\ncorporation shall be considered to be a subsidiary of Adaptive if Adaptive owns
\n50% or more of the combined voting power of all classes of the stock of such
\nsubsidiary that are entitled to vote, or 50% or more of the total value of all
\nclasses of the outstanding stock of such subsidiary. In addition, in determining
\nthe fair market value of Adaptive’ total assets for the purposes of making this
\nrepresentation, Adaptive shall exclude any cash and cash items (such as
\nreceivables), government securities and, to the extent provided in the
\napplicable Treasury regulations, any assets acquired (through incurring
\nindebtedness or otherwise) for the purposes of causing Adaptive to not be
\ncharacterized as an entity described in (i) or (ii) of the first sentence of
\nthis paragraph or causing Adaptive to meet the requirements of section
\n368(a)(2)(F)(ii) of the Code.<\/p>\n
11. Adaptive is not, and at the Effective Time will not be, a debtor under
\nthe jurisdiction of a court in a Title 11 or similar case. For purposes of the
\nforegoing, a “Title 11 or similar case” means a case under Title 11 of the
\nUnited States Code or a receivership, foreclosure or similar proceeding in a
\nfederal or state court.<\/p>\n
12. At the Effective Time, the fair market value of the assets of Adaptive
\nwill equal or exceed the sum of the Adaptive’ liabilities plus (without
\nduplication) the amount of liabilities, if any, to which its assets are or will
\nbe subject.<\/p>\n
13. None of the compensation to be received by any stockholder-employees or
\nstockholder-independent contractors of Adaptive for services rendered prior to
\nthe Effective Time was, or will be, separate consideration for, or allocable to,
\nany of such stockholder-employee’s or stockholder-independent contractor’s
\nshares of Adaptive Common Stock; none of the shares of Western Common Stock to
\nbe received by any stockholder-employees or stockholder-independent contractors
\nof Adaptive in connection with the Merger will be separate consideration for, or
\nallocable to, any employment, consulting or similar agreement or arrangement or
\nany covenant not to compete or release with respect to services rendered prior
\nto the Effective Time; and the compensation paid to any stockholder-employees or
\nstockholder-independent contractors of Adaptive for services rendered prior to
\nthe Effective Time will be for services actually rendered (or to be rendered)
\nand was, or will be, commensurate with amounts paid to third parties bargaining
\nat arm’s-length for similar services.<\/p>\n
14. Adaptive is not currently, and during the five years preceding the
\nEffective Time will not have been, a “United States real property holding
\ncorporation.” For purposes of the foregoing, a United States real property
\nholding corporation means a corporation in which the fair market value of its
\nUnited States real property interests equals or exceeds fifty percent of the
\nfair market value of (i) its United States real property interests, (ii) its
\ninterests in real property located outside the United States and (iii) any other
\nof its assets which are used or held for use in a trade or business.<\/p>\n
15. Pursuant to the Merger, all shares of Adaptive Common Stock will be
\nexchanged solely for Western Common Stock or for cash in lieu of fractional
\nshares of Western Common Stock that would otherwise be issued to stockholders of
\nAdaptive. For purposes of this representation, shares of Adaptive Common Stock
\nexchanged for cash or other property originating with Western or a party related
\nto Western will be treated as outstanding Adaptive Common Stock at the Effective
\nTime.<\/p>\n
70<\/p>\n
16. Adaptive has no plan or intention to issue any additional shares of its
\nstock that would cause Western to own less than (i) 80% of the total combined
\nvoting power of all classes of Adaptive stock entitled to vote and (ii) 80% of
\nthe total number of shares of each other class of stock of Adaptive.<\/p>\n
17. At the Effective Time, Adaptive will not have outstanding any warrants,
\noptions, convertible securities, or any other type of right pursuant to which
\nany person could acquire stock in Adaptive that, if exercised or converted,
\nwould affect Western’s acquisition or retention of control of Adaptive.<\/p>\n
18. To the knowledge of Adaptive, as of the Effective Time neither Western
\nnor any corporation related to Western will own beneficially or of record, or
\nwill have owned beneficially or of record during the five years preceding the
\nEffective Time, any shares of Adaptive Common Stock, or other securities,
\noptions, warrants or instruments giving the holder thereof the right to acquire
\nAdaptive Common Stock or other securities issued by Adaptive.<\/p>\n
19. There will be no dissenters to the Merger.<\/p>\n
20. The payment of cash in lieu of fractional shares of Western Common
\nStock that would otherwise be issued to stockholders of Adaptive in the Merger
\nis solely for the purpose of avoiding the expense and inconvenience to Western
\nof issuing and transferring fractional shares of Western Common Stock and does
\nnot represent separately bargained-for consideration. The total cash
\nconsideration that will be paid in the Merger to stockholders of Adaptive
\ninstead of issuing fractional shares of Western Common Stock will not exceed one
\npercent of the total consideration that will be issued in the Merger to
\nstockholders of Adaptive in exchange for their shares of Adaptive Common Stock.<\/p>\n
21. With respect to each instance, if any, in which shares of Adaptive
\nstock have been purchased by a stockholder of Western (a “Stockholder”) during
\nthe Pre-Merger Period (a “Stock Purchase”): (i) the Stock Purchase was not made
\nby such Stockholder as a representative, or for the benefit, of Western; (ii)
\nthe purchase price paid by such Stockholder pursuant to the Stock Purchase was
\nnot and will not be advanced, and was not and will not be reimbursed, either
\ndirectly or indirectly, by Western; (iii) at no time was such Stockholder or any
\nother party required or obligated to surrender to Western Adaptive stock
\nacquired in the Stock Purchase, and neither such Stockholder nor any other party
\nwill be required to surrender to Western the Western Common Stock for which such
\nshares of Adaptive stock will be exchanged in the Merger; and (iv) the Stock
\nPurchase was not a formal or informal condition to consummation of the Merger.<\/p>\n
22. Following the Merger, Western, Merger Sub and Adaptive will comply with
\nthe record-keeping and information filing requirements of Treasury Regulations
\nSection 1.368-3.<\/p>\n
23. The Merger will be reported by Western and Adaptive on their respective
\nfederal income tax returns as a reorganization within the meaning of Section
\n368(a) of the Code.<\/p>\n
71<\/p>\n
24. The undersigned is authorized to make all of the statements and
\nrepresentations set forth herein on behalf of Adaptive.<\/p>\n
25. No adaptive stockholder has guaranteed any Adaptive indebtedness that
\nis currently outstanding or will be outstanding at the Effective Time.<\/p>\n
Notwithstanding anything herein to the contrary, the undersigned makes no
\nrepresentations regarding any actions or conduct of Adaptive pursuant to
\nWestern’s exercise of control over Adaptive after the Merger.<\/p>\n
Very truly yours,<\/p>\n
Adaptive Broadband Corporation<\/p>\n
By:
\n —————————
\n Name:
\n Title:<\/p>\n
72<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[9318],"corporate_contracts_industries":[9516],"corporate_contracts_types":[9622,9626],"class_list":["post-42998","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-western-multiplex-corp","corporate_contracts_industries-telecommunications__equipment","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/42998","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=42998"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=42998"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=42998"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=42998"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}